Broadcom Inc reported modest quarterly sales growth and reiterated a muted forecast for the rest of the fiscal year, indicating that the trade dispute between China and the US is still suppressing demand for semiconductors.
Sales in the period ended Aug. 4 rose 9 percent to US$5.52 billion, the San Jose, California-based company said in a statement on Thursday.
Before certain items, profit in the fiscal third quarter was US$5.16 a share. That compares with average analyst estimates for per-share profit of US$5.13 on sales of US$5.52 billion, according to data compiled by Bloomberg.
Photo: Reuters
Broadcom said it still expects revenue in fiscal 2019 to be US$22.5 billion, a lowered projection it made in June.
CEO Hock Tan (陳福陽) has built a US$100 billion firm through a spate of acquisitions, including his purchase of part of Symantec Corp for US$10.7 billion last month.
While Broadcom has one of the broadest reaches in the technology industry, that diversity has not made it immune to the ongoing trade dispute between the US and China and blacklisting of Huawei Technologies Co (華為), which is hammering Tan’s semiconductor business.
“We believe demand has bottomed out, but will continue to remain at these levels due to the current uncertain environment,” Tan said in the statement.
There is little visibility due to the trade war and no sense of a “sharp recovery around the corner,” he said on a conference call.
About half of the chips Broadcom sells are either used in China or sent through factories there on the way to becoming part of electronic devices sold around the world.
Last year, Huawei accounted for about US$900 million of Broadcom’s sales, Tan has said.
The chipmaker’s position as a major manufacturer of components for Apple Inc and Samsung Electronics Co means its orders are seen as a gauge of confidence in future demand from some of the world’s largest smartphone makers.
It is also one of the leading suppliers of networking components used by large data-center operators, such as Alphabet Inc’s Google and Amazon.com Inc’s cloud division.
Tan said that there is a “seasonal uptick” in demand for phone parts because of the launch of new models from his “large North American customer,” using his typical reference for Apple
Orders at this point are typical of the buildup ahead of a phone release and sales of the devices will determine demand in the future.
Apple’s iPhone 11 goes on sale on Friday next week.
Three months ago, Tan pared back his revenue forecast for the year, indicating that sales in each of the remaining quarters would be US$1 billion lighter than previously expected.
That has held back Broadcom’s stock, which is up 18 percent this year, compared with a 39 percent advance by the Philadelphia Stock Exchange Semiconductor Index.
In the current circumstances, the company will prioritize paying down debt over buying back shares, chief financial officer Tom Krause said on the conference call.
Doing so is important to retaining the company’s investment-grade credit rating.
Net income in the fiscal third quarter declined to US$715 million, or US$1.71 a share, from US$1.2 billion, or US$2.71, a year earlier, Broadcom said.
Chip unit sales were about US$4.4 billion in the recent period, accounting for 79 percent of the company’s total revenue.
They were down 4.7 percent from a year earlier.
Nvidia Corp’s demand for advanced packaging from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) remains strong though the kind of technology it needs is changing, Nvidia CEO Jensen Huang (黃仁勳) said yesterday, after he was asked whether the company was cutting orders. Nvidia’s most advanced artificial intelligence (AI) chip, Blackwell, consists of multiple chips glued together using a complex chip-on-wafer-on-substrate (CoWoS) advanced packaging technology offered by TSMC, Nvidia’s main contract chipmaker. “As we move into Blackwell, we will use largely CoWoS-L. Of course, we’re still manufacturing Hopper, and Hopper will use CowoS-S. We will also transition the CoWoS-S capacity to CoWos-L,” Huang said
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
INDUSTRY LEADER: TSMC aims to continue outperforming the industry’s growth and makes 2025 another strong growth year, chairman and CEO C.C. Wei says Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp and Apple Inc, yesterday said it aims to grow revenue by about 25 percent this year, driven by robust demand for artificial intelligence (AI) chips. That means TSMC would continue to outpace the foundry industry’s 10 percent annual growth this year based on the chipmaker’s estimate. The chipmaker expects revenue from AI-related chips to double this year, extending a three-fold increase last year. The growth would quicken over the next five years at a compound annual growth rate of 45 percent, fueled by strong demand for the high-performance computing
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.