(Bloomberg) — Broadcom Inc., one of the world’s largest chipmakers, gave a bullish forecast for quarterly sales, signaling that corporations have returned to spending on their computer networks as they open up offices.Revenue in the fiscal third quarter will be about $6.75 billion, the San Jose, California-based company said Thursday in a statement. That compares with an average analyst estimate of $6.59 billion, according to data compiled by Bloomberg.A succession of acquisitions by Chief Executive Officer Hock Tan have made Broadcom one of the world’s top semiconductor makers by market value. He’s also added a software division that makes his company’s earnings a broader indicator of trends in corporate spending across the economy.
“Due to the strength in demand for semiconductors across our multiple end markets, we delivered 20% year-over-year increase in semiconductor revenue,” Tan said in the statement. “Our third quarter outlook projects this year-over-year growth to sustain, as we continue to see strong demand from service providers and hypercloud.”
Broadcom’s wireless connectivity chips are used in Apple Inc.’s iPhone and other smartphones. Its switch silicon and custom designs are essential parts of data centers owned by cloud computing giants such as Alphabet Inc.’s Google and Amazon.com Inc.’s AWS. Broadcom is also a major provider of silicon used in set-top boxes and home-networking gear.Like many of its peers, Broadcom has been swamped with orders from customers amid rising concerns that industrywide shortages will hurt their ability to build new gear. Tan has said he’s already sold 90% of what he can supply this year by taking orders that he won’t allow to be canceled. Normally, chipmakers have about a quarter of their supply locked up like this. More than a year ago, Tan was one of the first chip CEOs to warn customers to order well in advance to guarantee supply.
The CEO has tried to reassure analysts and investors that his customers are ordering supply that reflects true demand for electronics, rather than fearfully building inventory that will later result in a glut.
In the fiscal second quarter, which ended May 2, Broadcom’s profit rose to $1.49 billion, or $3.30 a share. Revenue jumped 15% to $6.61 billion. Excluding certain items, profit was $6.62 a share. On that basis, analysts had predicted a profit of $6.44 a share on sales of $6.51 billion.
The company’s main chip division, semiconductor solutions, generated $4.82 billion in sales. Analysts were looking for $4.68 billion, according to data compiled by Bloomberg.
Broadcom’s stock was little changed in extended trading after the report. The shares have lagged behind average gains by other semiconductor stocks this year, increasing 6.2%, compared with a 12% gain by the Philadelphia Stock Exchange Semiconductor Index.
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