Hi YXI friends,

For those unfamiliar with Broadcom, it is not a chip company like Nvidia, which designs its own GPUs, brands them, and sells them off the shelf.

Broadcom serves as a co-designer and manufacturing partner for hyperscalers seeking their own custom AI chips.

For example, Google knows what kind of chip it wants for its data centres, but it does not have the in-house silicon engineering team to tape out a world-class chip at cutting-edge process nodes. Google comes to Broadcom with the architecture and workload requirements. Broadcom's engineers handle the complex physical design, packaging, SerDes (high-speed interconnect), and interface work needed to turn that vision into a real chip that TSMC can fabricate. The result is Google's TPU. Google owns the architecture and the IP of its TPU, but Broadcom does the heavy lifting.

Broadcom has a few very big customers, but not all of them are named in its report. Google is the longest-standing and largest customer, as mentioned in the example above. Meta is the second confirmed customer, as its MTIA (Meta Training and Inference Accelerator) programme uses Broadcom's custom silicon expertise.

Then there are customer-of-customers, like Anthropic. Anthropic is a customer of Google Cloud and uses Google's TPUs at a massive scale. Anthropic's demand for Google TPUs is becoming so large that it directionally drives Broadcom's volume.

To summarise, Broadcom is the pick-and-shovel play on the hyperscaler custom silicon trend. It does not need to win the AI model race. It just needs every major cloud company to keep building custom chips, which is exactly what is happening.

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