‘Who Knows?’ How Long Elevated Chip Demand Will Last: Broadcom CEO

Semiconductor lead times “remain extended” and “unchanged” from previous quarters and inventory in the channel “remains lean,” said Broadcom CEO Hock Tan on an earnings call Thursday for its fiscal Q1 ended Jan. 30. Broadcom’s hardware backlog at the end of the quarter was more than $25 billion compared with $22 billion the preceding quarter, said Chief Financial Officer Kirsten Spears. Lead times remained “steady” at 50 weeks, she said. Broadcom’s software backlog “continued to grow as well and ended the quarter at over $15 billion,” she said. “As a point of reference, software backlog was $13 billion a year ago.” The “nice thing” about Broadcom’s semiconductor business is that it draws 75% of its revenue from about 100 customers through direct sales, said Tan. “We have enough visibility on these customers” to be able to ship “to what exactly they need,” he said. Broadcom already has started booking 2023 orders, “given our lead times,” he said. He estimates the “trend demand increase” will average close to 20% year over year, he said. Asked how long he thinks the elevated demand trends will last, Tan said: “Who knows? It’s hard for me to figure, because I’ve been wrong so many times.”