Broadcom predicts smartphone chip rebound in bullish forecast

Revenue in the three months ending Nov. 1 will be $6.4 billion, plus or minus $150 million, the San Jose, California-based company said Thursday in a statement.

Broadcom (REUTERS)

Broadcom Inc., a chipmaker that has branched out into enterprise software, gave a bullish forecast helped by spending on data centers and a predicted rebound in shipments of smartphone components. Revenue in the three months ending Nov. 1 will be $6.4 billion, plus or minus $150 million, the San Jose, California-based company said Thursday in a statement. 

That compares with an average analyst prediction of $6.19 billion, according to data compiled by Bloomberg.Broadcom has a wide variety of products spanning components for servers, smartphones, cars, security software, home broadband and software that runs the biggest mainframe computers. Some elements of the global lockdown due to the Covid-19 virus have boosted demand while others, such as lower spending on smartphones and government infrastructure, have hurt.

“Our outlook for the fourth quarter reflects a strong anticipated ramp in wireless, as well as the continuing surge in demand for networking from cloud and telecom customers, more than offsetting expected softness in enterprise” Chief Executive Officer Hock Tan said in the statement.

Broadcom makes chips that filter radio signals and provide WiFi connections in iPhones and other smartphones. Analysts estimate it gets as much as a quarter of revenue from Apple Inc. Three months ago the chipmaker indicated that the new iPhone will debut later than it usually does in the year, confirming reporting by Bloomberg.The company also is a key supplier of switch chips, the complex semiconductors that manage data traffic in networking equipment, an area where demand is surging, helped by the increase in demand for cloud computing to support remote learning and work.The stock gained about 2% in extended trading following the report. The shares closed at $352.09 earlier in New York and have gained 11% this year.

Tan assembled Broadcom in a string of acquisitions, giving its products a role in everything from powerful data center networking gear to smartphones. The company, one of the world's largest chipmakers, has expanded into mainframe computer and security software.Net revenue in the fiscal third quarter rose 5.5% to $5.82 billion, the company said. Profit, excluding certain items, was $5.40 a share. That performance compares with analysts' average estimates of $5.22 a share on sales of $5.77 billion.

Written by Ian King.