Semiconductor company Broadcom is reaping the benefits of the competition between cable and fiber providers, posting what CEO Hock Tan called “exceptional” broadband revenue growth in the company’s fiscal Q1 2023 (ended January 29, 2023).
Consolidated revenue of $8.9 billion was up 21% year on year, with broadband revenue specifically growing 34% to a record $1.2 billion.
During an earnings call, Tan attributed most of the growth to uptake of 10-gig PON solutions across Europe and North America. This, he noted, has triggered a response from cable operators, who are scrambling to upgrade their networks with DOCSIS 3.1.
“Cable has to update DOCSIS to be able to compete and not lose subscribers in the same market they compete against each other,” he stated. While PON and DOCSIS 3.1 are driving orders today, Tan added “within the next couple of years” it hopes to get another boost from DOCSIS 4.0.
Tan also noted the infrastructure deployments come with “very high attach rates of Wi-Fi 6 and 6E,” which is also good for business.
Though growth in the broadband business is expected to continue in fiscal Q2, Tan said it’ll likely be at a slower pace closer to 10%.
“Broadband is, for us, a very, very good business and very sustaining. Used to be boring. Boring is good at this point,” he stated.
VMware update
Tan also provided an update on Broadcom’s $61 billion acquisition of cloud software company VMware, which has been pending since May 2022.
“We continue to make progress with our various regulatory filings around the world, having now received legal merger clearance in Brazil, South Africa, and Canada and foreign investment control clearance in Germany, France, Austria, Denmark, Italy, and New Zealand,” he said.
While reviews in some regions may take longer than others, Tan said Broadcom still expects to close the transaction in its current fiscal year.
Financials
Broadcom posted net income of $3.4 billion on its $8.9 billion in revenue, with its profit up year on year from $2.0 billion. Semiconductor revenue of $7.1 billion was up 21% while Infrastructure Software revenue fell 1% to $1.8 billion.
For its fiscal second quarter, Broadcom said it expects revenue to come in around $8.9 billion.