Our partnership with Google will continue to sustain because we have the strongest IP portfolio in semiconductor design, including industry leading SerDes, chip to chip interconnect, leading edge HBM and SRAM integration, and simply differentiated advanced packaging. Most of all, we have consistently delivered the fastest time to market for TPUs from product definition to production.
We found the need for risk mix. We believe these are very deep modes for any competitor to cross. Moving on to Anthropic. Starting with the one gigawatt of Ironwood we are deploying in 2026, we expect Anthropic to deploy another five gigawatts of TPU version 8i in 2027. And in 2028, we have clear line of sight to deliver another incremental 10 gigawatts, even as we expect Google to grow for us.
Anthropic is on track to become our largest XPU customer in 2027 and sustain that in 2028. For OpenAI, Helipono is on track for the planned deployment of 1.3 gigawatts in 2027. Together with OpenAI, we are deep in development of the next generation XPU beyond Helipono, which is approaching Tebow. In 2028, we have line of sight for OpenAI to deploy over five gigawatts of Helipono and its successor generation of XPU, which would make OpenAI our second largest XPU customer. In addition, we are in development with OpenAI on their third generation XPU.
As OpenAI announced last week, Helipono outperforms the Grace Blackwell Ultra in performance per watt, latency, throughput, and power. And it’s actually comparable to Vera Rubin GPUs in running OpenAI workloads. The lesson here is when you co-develop a chip that is optimized for your particular LLM workloads, you will outperform any GPU. Like TPUs, Helipono demonstrates that it can also run other frontier models, and you can do all this at half the cost of a GPU. Our partnership with Meta to deliver multiple generations of MTIA XPUs remains on track.
Between now and the end of 2027, we will be delivering three generations of MTIA accelerators to Meta. Across these three generations, we have line of sight to deploy three gigawatts through ’28.
AI Networking
Our content in AI, as you know, goes beyond XPUs. We’re the leader in AI networking, and we continue to extend our lead. In Ethernet switching for scale up and scale out, we were first to market with our 100 terabit Tomahawk 6, and we just taped out Tomahawk 7, the industry’s first 200 terabit per second Ethernet switch. For scaling in, we continue to be the leader in every generation of PCI Express switching.
We’re now the leader in leading edge optical DSPs and are rapidly expanding our capacity and market position as a leader in EMLs, VCSELs, and CW lasers for optical interconnects. In sum, we continue to invest and invest heavily to provide the broadest and most leading edge AI portfolio. In fact, our AI networking revenue is expected to grow just as fast as XPUs over the next few years.
Fiscal 2027 and 2028 AI Revenue Outlook
Reflecting our excellent progress with this key group of LLM customers, here is our outlook for our AI semiconductor revenue. In 2027, we have secured the supply to again double AI revenue to approximately $115 billion.
Our demand actually exceeds this outlook, and we will work to improve supply. In 2028, we expect the trajectory of growth to continue. We have line of sight for fiscal 2028 AI semiconductor revenue growth to again double to $230 billion. Here again, we have secured the supply to meet this outlook. This AI revenue guidance through ’28 is being provided to give you the trajectory of our growth. Demand for compute continues to be extremely strong.
As a result, I got to say we are very much on target to exceed 38.
Non-AI Semiconductors and Infrastructure Software
Now turning to non-AI semiconductors, Q3 revenue of $4.2 billion was up 5% year on year and flat sequentially. Broadband and server storage together were up, partially offset by a decline in wireless. In Q4, we forecast non-AI semiconductor revenue to be approximately $4.3 billion, up 5% sequentially.
Talking about infrastructure software, Q3 revenue of $8.8 billion was up 29% year on year, and we sustained ARR growth of 15% year on year.
For Q4, we forecast infrastructure software revenue to stabilize at approximately $8.7 billion. We announced VMware Private AI Cloud, giving enterprises a secure cost effective platform to build and run AI alongside the existing applications. It brings together AI infrastructure, security, and compliance, and the tools to build and operate trusted AI agents, all while protecting enterprise data. VCF, VMware Cloud Foundation, is also making it easier for customers to repatriate workloads from public cloud to private cloud where they can gain greater control and significantly improve infrastructure economics. Enterprise consumption of AI is, in fact, opening a new opportunity for our infrastructure software business.
So to sum it all, for Q4, $34.8 billion, up 93% year on year. We expect Q4 AI revenue to be $21.7 billion, up 236% year on year, and we expect operating margin to be approximately 66% of revenue. And with that, let me turn it over to Amie.
AMIE THUENER, CHIEF FINANCIAL OFFICER, BROADCOM INC.: Thank you, Hock. Let me now provide additional detail on our Q3 financial performance.
Q3 Financial Performance
Consolidated revenue was a record $29.6 billion for the quarter, up 86% year on year. Gross margin was 75% of revenue in the quarter, down 210 basis points sequentially, as AI Semiconductor revenue was a greater proportion of our total revenue mix. This was better than our guidance of 74%. Q3 operating income was a record $20.1 billion, up 92% from a year ago. Even with the decline in gross margin due to revenue mix, operating margin increased 240 basis points year over year to 67.9% because of the phenomenal operating leverage we are achieving.
Aligned with this, Q3 non-GAAP EPS of $3.32 was up 96% year on year. Now, I’ll review the P&L for our two segments, starting with Semiconductors. Revenue for our Semiconductor Solutions segment was a record $20.8 billion, up 127% year on year and represented 70% of our total revenue. AI Semiconductor revenue of $16.7 billion represented 56% of total revenue, up from 49% in Q2. Gross margin for our Semiconductor Solutions segment was approximately 76%.
Operating expenses of $1.2 billion reflected investments in R&D, with OpEx representing 6% of segment revenue. Operating margin of 61% was up 440 basis points year on year, as revenue growth of 127% outpaced operating expenses, which grew 22% year on year. Moving on to Infrastructure Software. Revenue of $8.8 billion was up 29% year on year and represented 30% of our total revenue. Gross margins for Infrastructure Software was 94% in the quarter, and operating expenses were over $900 million. Q3 software operating margin was up 650 basis points year on year to approximately 84%.
Balance Sheet and Cash Flow
Moving on to the balance sheet. We ended the third quarter with $24 billion of cash compared to $19.6 billion in the prior quarter, up $4.3 billion sequentially. We ended the third quarter with inventory of $4.5 billion to support our strong semiconductor demand. Moving on to cash flow. Free cash flow in the quarter was a record $13.7 billion and represented 46% of revenue.
We spent $532 million on capital expenditures in the quarter. Turning to capital allocation. In Q3, we paid stockholders $3.1 billion of cash dividends, based on a quarterly common stock dividend of $0.65 per share. In Q3, we also paid down $5.6 billion of long term debt. Subsequent to quarter end, we paid down an additional $1.5 billion of senior notes upon maturity.
The weighted average coupon rate and years to maturity of our gross principal fixed rate debt of $59.6 billion is 4% and 7.4 years, respectively. In June, we established the AI XPV platform in partnership with Apollo and Blackstone to enable more than 20 gigawatts of compute infrastructure for OpenAI and Anthropic by the end of 2028. We closed the first $35 billion tranche in June for Anthropic’s one gigawatt deployment, which is already underway. While future tranches will include unique features tailored to specific lab and investor needs, our core strategy remains consistent. First, we are empowering two of our most strategic customers, the leading AI labs, to bridge the gap between their current cash flow and the significant upfront investments required for their businesses.
Our XPUs enable cost effective, sustainable growth at multiples of their infrastructure costs. Second, this XPV platform enables highly investable customers and facilitates execution where demand is already locked in. And third, we review any strategic financings through a commercial as well as balance sheet lens, consistent with our existing capital allocation framework. Through the XPV platform, we partner with sophisticated third party financial partners to independently underwrite and capitalize the assets, rather than providing the direct financing ourselves. Where necessary, we may provide modest residual value guarantees, which are contingent liabilities we view as low risk, supported by the strong profitability trajectory of these labs and the sustaining value of the underlying assets.
Q4 Guidance
Moving on to guidance. Our guidance for Q4 is for consolidated revenue of $34.8 billion, up 93% year on year. We forecast Semiconductor revenue of approximately $26.1 billion, up 136% year on year. Within this, we expect Q4 AI Semiconductor revenue of $21.7 billion, up over 236% year on year. We expect Q4 Infrastructure Software revenue of approximately $8.7 billion, up 24-25% year on year.
Moving on to margins. As the proportion of AI revenue accelerates in Q4, we expect our Q4 consolidated gross margin to be approximately 73%, down from 78% a year ago. As we’ve discussed previously, this reflects the increasing mix of XPUs, with their increasing memory content, which is diluting our consolidated gross margin. Regardless, we expect Q4 operating margin to be approximately 66%, flat from a year ago because our strong revenue growth drives substantial operating leverage. We expect the non-GAAP tax rate for Q4 and fiscal year 2026 rate to be approximately 16% due to the impact of the global minimum tax and the geographic mix of income compared to that of fiscal year 2025.
We expect the Q4 non-GAAP diluted share count to be approximately 4.94 billion shares, excluding the impact of potential share repurchases. And in Q4, we expect capital expenditures of $1.4 billion as we invest in capacity for semiconductors. As Hock mentioned in his remarks, we expect AI revenue to double again to approximately $115 billion in fiscal 2027 and double again in fiscal 2028 to $230 billion. This AI revenue guidance is being provided to you to give you the trajectory of our growth, and we do not intend to update it on a quarterly basis. That concludes my prepared remarks. Operator, please open up the call for questions.
Question and Answer Session
OPERATOR: Thank you. One moment while we compile the Q&A roster. And that will come from the line of Joseph Moore with Morgan Stanley. Your line is open.
ANALYST: JOSEPH MOORE – MORGAN STANLEY: Great. Thank you, and congratulations on the results. You talked about the business doubling next year, and you said demand could be higher than that. Can you talk about the supply around that? And kind of what are the supply bottlenecks? And what are the variables that could drive that number higher if you’re able to resolve them?
HOCK TAN, PRESIDENT AND CEO, BROADCOM INC.: Well, Joe, that’s a loaded question. Whatever I tell you, you guys go on and print a bigger number. I think that’s funny. And we’re very careful. And to be honest, we try to be conservative.
So we’re giving you an outlook. And, yeah, demand, we can ship significantly more. Question is sometimes in our mind, are they going to be, even as we ship the chips, going to be deployed on a timely basis? And that’s always very much in our mind when we give you that outlook. But certainly our customers want us to ship more, but we have secured supply and we think it’s the right number to put it at $115 billion.
And if circumstances change and our ability to scale more supply changes, of course, we will uplift. But at this point, that’s our best outlook. And by the way, the same thinking applies to 2028 when we give you that outlook of $230 billion. This is real demand, we believe, based on what’s available, what data center sites and locations are ready by 2028 with respect to our customers, the size of what we have, and against the supply chain we have in leading edge wafers, substrates, and HBM memory.
And so this is, again, a carefully structured outlook that we believe we can achieve.
OPERATOR: Thank you. One moment for our next question. That will come from the line of Blayne Curtis with Jefferies. Your line is open.
ANALYST: BLAYNE CURTIS – JEFFERIES: Hey, guys. Thanks for taking my question. I actually want to follow up on Joe’s question on supply, big key point. Can you just talk about from either a substrate or interposer co-ops replacement, is any of it fused decided to use your Singapore capacity? How does that fit into that supply picture you put together?
HOCK TAN, PRESIDENT AND CEO, BROADCOM INC.: Well, we are going to start deploying our Singapore fab for substrates, by the way, starting fiscal 2027. And that would, I guess, address a key part of our supply bottlenecks. Anything else?
ANALYST: BLAYNE CURTIS – JEFFERIES: One moment. Maybe you can go finish your question. No, I was going to give another one because I was short on the answer. Just one clarification quickly. The Google number you gave, and then you said 10 gigawatts for Anthropic, are those it — it’s not one number, right? The 10 gigawatts is just for Anthropic?
HOCK TAN, PRESIDENT AND CEO, BROADCOM INC.: 10 gigawatts is just for Anthropic.
ANALYST: BLAYNE CURTIS – JEFFERIES: Thanks a lot.
OPERATOR: One moment for our next question. That will come from the line of Harlan Sur with JPMorgan. Your line is open.
ANALYST: HARLAN SUR – JPMORGAN: Yeah. Good afternoon. Thanks for taking my question. Hock, your customers are driving their XPUs, their GPUs higher in performance.
The networking bandwidth is also scaling accordingly, right? Your customers are now moving from 100 gigabits per second per lane to 200 gigabits per second per lane from Tomahawk 5 to Tomahawk 6. We’ve heard that Tomahawk 6 ramp has been the fastest ramp of any of your switching families, and we’ve also heard that you guys are almost sold out for Tomahawk 6 for next year. I’m not sure if you can give us an update on that.
And it’s also good to see the team pick out its next gen Tomahawk 7 with 400 gig SerDes. Out of your six frontier model based XPU customers, how many of them are using Tomahawk scale out networking? And can you also just give us an update on the adoption of your Tomahawk Ultra scale up platform as well?
HOCK TAN, PRESIDENT AND CEO, BROADCOM INC.: Charlie will take this question. He knows everything here.
CHARLIE KAWWAS, PRESIDENT, SEMICONDUCTOR SOLUTIONS GROUP, BROADCOM INC.: Thank you, Hock. And thanks, Harlan, as well. You’re right, our Tomahawk 6 has been a phenomenal success. It started really first in scale out, as you mentioned, and it’s available both in 100 gig and 200 gig SerDes. So we actually have two versions of Tomahawk 6, both are very successful, and both are deployed in pretty much all of the AI hyperscalers that are building XPUs with us, and even those that are not using our XPUs are using Tomahawk 6, both 100 gig and 200 gig.
With respect to Tomahawk Ultra, we have quite innovated ahead of the market here by enabling scale up using low latency Ethernet. The adoption also on this device has surprised us, and we’re starting to see it deployed, starting actually this quarter and in FY2027, coming up in scale up applications.
HOCK TAN, PRESIDENT AND CEO, BROADCOM INC.: Just to amplify what Charlie is saying with Tomahawk Ultra is that we are enabling now scaling up within a cluster of GPU, XPU, and a rack on basically Ethernet for the first time, because Tomahawk Ultra will perform just as well as anything else that existed prior to being able to do it on Ethernet, particularly with respect to loss and latency.
CHARLIE KAWWAS, PRESIDENT, SEMICONDUCTOR SOLUTIONS GROUP, BROADCOM INC.: Thanks, Hock. Thanks, all.
OPERATOR: One moment for our next question. And that will come from the line of Stacy Rasgon with Bernstein. Your line is open.
ANALYST: STACY RASGON – BERNSTEIN: Hi, guys. Thanks for taking my questions. I just wanted to verify. If I add up the gigawatts for ’27 and ’28 you have line of sight to, I’m still getting roughly 10 for ’27, about six of which are Anthropic and OpenAI, and roughly 20 for ’28, roughly 15 of which are Anthropic and OpenAI. I just want to make sure that was the case. And if it is, if I calculate the revenue per gigawatt, I come out with revenue somewhere between $11 billion and $12 billion per gigawatt. A competitor suggested something like $40 billion. And I’m just wondering, is this the right level that we should think about for your content?
And how should that trend as we go forward, into more generations of XPUs, again, with higher performance and higher memory? How do those trend? I guess, first, just the gigawatt count, and second, the content.
HOCK TAN, PRESIDENT AND CEO, BROADCOM INC.: Right. Stacy, you’re very clever. You put two tricky questions into one. So let me take it one by one. Yes, you can count the number of gigawatts we are outlining, not everyone, because we are focused — to be fair, we have six customers. Four of them are just simply going to be huge.
And we outlined and we walk through with you guys their journey into deploying XPUs. As I said, it’s a journey. Google has been doing it for the last ten years. Others, OpenAI, last two, three years. Meta, last three years.
Each one is doing it differently, and we like to take you guys through it. But more importantly, what it means in their deployment of XPU for these three years, ’26, ’27, ’28. And so we laid out — and you’re right, Stacy, you add up the Google gigawatts — so we’re showing where they’re headed. What we didn’t tell you specifically when we came up to the final number is how many of these gigawatts do actually come up for actual deployment because deployment doesn’t just include getting the chips out there.
Before you get the chips out there, you got to get the data center shell in place and ready for literal production. And we’re talking about fiscal years. So what we’re saying is as you add up the gigawatts, we’re not saying that over the next two years, ’27, ’28, that there are 30 gigawatts that will go into production, and therefore, we ship it. We think we judge it conservatively to be somewhat less, but we see the demand that if they can get it all in place and our products, and we can ship those chips, racks in place, it will be 30 gigawatts between the customers we have, the six customers we have. Question is, will all 30 come into production within these two fiscal years?
And we are giving you a judged number of $115 billion of chips to these guys in fiscal 2027, another $230 billion in ’28, which would add up, I know, to about $350 billion. So another way of saying it is we believe, with a pretty high degree of confidence, we will ship $350 billion of AI semiconductors to these customers in the next two years. That’s the best way to look at it. It doesn’t necessarily mean all 30 gigawatts need to have been deployed within that period.
Turning to your more interesting question. As I said, when you do an XPU, it’s not only performs as well, if not better, for your particular LLM workloads for each of our customers. It’s also half the cost. In fact, less than half the cost.
ANALYST: STACY RASGON – BERNSTEIN: And that’s — you made my point exactly. Thank you.
OPERATOR: One moment for our next question. That will come from the line of Ben Reitzes with Melius. Your line is open.
ANALYST: JACK ADAIR – MELIUS: Hi. This is Jack Adair on for Ben. Thank you for the question. Can you shed a little bit more light on the maximum off balance sheet risk for the backstop agreements? Your last quarter showed that the first tranche had maximum exposure of about $29 billion. Is this about the order of magnitude for each of the Anthropic and OpenAI gigawatts over the next few years?
And could you add a little bit more color as well on the residual value and the risk associated? Thank you.
AMIE THUENER, CHIEF FINANCIAL OFFICER, BROADCOM INC.: Thanks, Jack. Listen, we don’t have anything to announce today on residual value guarantees or backstops, so there’s nothing new to add.
So the numbers that you outlined around what we’ve already done remain true. And as I mentioned in my prepared remarks, we’re going to evaluate any strategic financing really on a deal by deal basis. And we expect that any that we do in the future, they’re going to have unique features, and they’re going to be tailored specifically to the lab and to the investor needs. So I can’t give you an overarching look at what’s the max and what each one’s going to look like, but we will tell you at the right time. We have nothing to announce today.
Next question.
OPERATOR: Thank you. One moment for our next question. That will come from the line of Vivek Arya with Bank of America. Your line is open.
ANALYST: VIVEK ARYA – BANK OF AMERICA: Thanks for taking my question. Amie, I just wanted to clarify any impact on gross margins in ’27 and ’28 given this XPU mix and rise in memory cost. And then, you mentioned the two frontier labs will be your largest AI customers, even though Google continues to say they are supply constrained. So why aren’t they taking more? In many cases, these frontier labs depend on land and power from their cloud service providers, sometimes NVIDIA related entities.
So how much of their use of silicon is truly their choice versus what their CSP or funding partner dictates? I’m just curious what gives you the certainty that they will give Broadcom that specific business in ’27 or ’28 when so much of their funding depends on other cloud service providers who might have a different view when it comes to the choice of silicon in that specific facility.
HOCK TAN, PRESIDENT AND CEO, BROADCOM INC.: The best way to answer that, a couple of ways I have of answering that, and a couple of points. Don’t forget, the rate of growth — these startups, and we’re talking about, we have six customers, and we are creating these financial vehicles, as Amie described them, for just two of them, not all.
The other four customers, ours, are financially secure, stable enough to be able to fund it themselves, and we’re happy for them to do that and get them up to where they need to with technology, sheer technology, which we have in full supply. With these two guys, Anthropic and OpenAI, I mean, it’s like thinking of — you have two geniuses in the middle of Mongolia, say, and they need to go to college to fulfill where they want to. So we do what we can to help them. And part of it is creating sources of financing to help these companies with the leading edge frontier models in the world, be able to play in the same playing field and be able to offer these great technology products to the world. And that’s simply what we’re doing.
It’s a great investment for us when you think about it, that every gigawatt of compute they deploy, they could achieve $30 billion of ARR, annual revenue per gigawatt. That’s a hell of a business model. So for us, that’s a great investment to focus on doing. So to put that simply, that’s how we look at this. It makes economic sense for Broadcom to invest and enable these guys.
Now these guys are going to be hyperscalers in their own right. So what they do is they want first party compute capacity, just as they want to create silicon that is very cost performance optimized, and they want to run their own data centers eventually — first path, not even eventually. They want to run it as fast as they can. Short term, you’re right, they are using cloud services, third party services to deploy their models.
Long term, we see these guys to be no different from a hyperscaler and will run their own data centers and be first party to offer AI, generative AI, APIs, and models to the world. So we see that happening. It’s not speculation. It’s actually happening, and we are in the midst of enabling that.
And I’m happy to take your gross margin question.
AMIE THUENER, CHIEF FINANCIAL OFFICER, BROADCOM INC.: First, I want to just make sure I correct what I said before, just to be super crisp. Gross margin for our Semiconductor Solutions segment was approximately 76% in Q3. And to your question, gross margin really reflects revenue mix between both semiconductors and infrastructure software. And then, within semiconductors, it also is the product mix that’s reflected, as well as increasing memory content. And so, as you can see, as XPUs become a larger proportion of our total revenue mix, it impacts our margin.
We guide one quarter at a time, so we’ll tell you each quarter what our margin is going to look like.
HOCK TAN, PRESIDENT AND CEO, BROADCOM INC.: Yeah, it’s not the first time we’ve told you guys that — stop focusing on gross margin is what we’re saying. Look at where it matters, operating margin, at the end of the day, because the growth in revenue far surpasses the growth in OpEx, operating spending to support that growth in revenue. So we have a lot of accretion, operating leverage, we call it, on operating margin. So we expect to be able to sustain operating margin even as mix of products dilutes the gross margin.
OPERATOR: Thank you. One moment for our next question. And that will come from the line of Tom O’Malley with Barclays. Your line is open.
ANALYST: TOM O’MALLEY – BARCLAYS: Thanks for taking the question. This one’s for Hock and Charlie. So you guys talked a bit about the Tomahawk Ultra. You’re ramping a variety of ASICs over the next couple of years. How should we think about the attach rate of Tomahawk Ultra to the ASICs that you’re developing? I would assume that when a customer goes down the road with you for an ASIC, they would decide to use your networking as well.
Maybe some kind of forecast as to how many of those customers are using your Tomahawk Ultra, how many are using Ethernet, just because I assume your penetration with your accelerators is going to lead to a lot of success on the networking side. Any help there would be great. Thank you.
HOCK TAN, PRESIDENT AND CEO, BROADCOM INC.: Go ahead, Charlie.
CHARLIE KAWWAS, PRESIDENT, SEMICONDUCTOR SOLUTIONS GROUP, BROADCOM INC.: Okay, thank you, Hock. Yeah, on the attach rate for scale up, today we’re actually seeing customers who build XPUs with us deploy either Tomahawk 6 — they used to deploy Tomahawk 5, now they’re going to Tomahawk 6 — and some of them are going to Tomahawk Ultra. So if you look at where we’re seeing XPUs and even GPUs, we’re seeing scale up solutions adopt both Tomahawk 6 and Tomahawk Ultra, and the beauty and the reason why they’re doing this, as Hock articulated earlier on, it’s Ethernet based, which means it’s open, anybody can connect to it, especially with the standards that we have collaborated with the entire industry on. So at this point in time, we’re seeing it pretty much deployed in both XPU clusters, and in some GPU clusters.
OPERATOR: Thank you. One moment for our next question. That will come from the line of Will Stein with Truist Securities. Your line is open.
ANALYST: WILL STEIN – TRUIST SECURITIES: Great. Thanks for taking my question. Congrats on the good results and the very impressive longer term outlook you gave.
I hope you can tell us a little bit about the constraints as it relates to land, power, and shell. You mentioned this a little bit earlier, but I wonder to what degree the outlook is sensitized to potential constraints in that area? Thank you.
HOCK TAN, PRESIDENT AND CEO, BROADCOM INC.: Good question, Will. Of course, we have to be realistic, and when we provide our outlook, we don’t just look at what our customer, our end customer, one of those frontier model labs, just asks of us for compute capacity in the form of chips, or in some cases, even in form of racks.
We are very engaged with each of them on how much LPS — land, power, shell — and systems they have before we actually believe it will happen. Because some of this part on the site’s power shell has a long lead time. The construction project, you correctly indicate that. So we do that, and we do that analysis with our customer, and we reflect that in the forecast outlook we’re giving you today.
OPERATOR: Thank you. One moment for our next question. And that will come from the line of Joshua Buchalter with TD Cowen. Your line is open.
ANALYST: JOSHUA BUCHALTER – TD COWEN: Hey, guys. Thank you for taking my question. With XPV, I think you have $35 billion of the financing secured. As we think about the 10 gigawatts for Anthropic and the five for OpenAI in fiscal 2028, are you expecting most or all of this to be financed through the XPV? And can you give us sort of any help on the timeline and hurdles required to secure financing as we look forward to those deployments getting secured? Thank you.
HOCK TAN, PRESIDENT AND CEO, BROADCOM INC.: Let me start broadly, and Amie will give you specifics. Not every site will be the same. Because don’t forget, next two years, we’ll see things happen between Anthropic and OpenAI. And, you know, it’s an open secret, Anthropic is well on its way to an IPO.
And with that, its investment credit will change. OpenAI, we still have less clarity, but it’s different. And so with that, let me pass it to Amie.
AMIE THUENER, CHIEF FINANCIAL OFFICER, BROADCOM INC.: I mean, I think just to double down on that, I think in every scenario, our partners, we’re going to be looking for financing from lots of different sources. In some cases, we may step in and help out if it makes sense to us, and if it’s within our framework.
And in other cases, we may not, but we’re going to look at it case by case, and evaluate the specific needs.
HOCK TAN, PRESIDENT AND CEO, BROADCOM INC.: Thank you both.
OPERATOR: One moment for our next question. And that will come from the line of Jim Schneider with Goldman Sachs. Your line is open.
ANALYST: JIM SCHNEIDER – GOLDMAN SACHS: Thanks, and thanks for taking my question. I was wondering if you could maybe address some of the other constraints that are impacting your outlook. You mentioned land, power, shell. Do you think that is the largest of the constraints that you face heading into fiscal 2027? And specifically, can you address any other supply chain constraints, whether that be memory, substrates, or other components that could be impacting your outlook?
To what extent could you expect those to get ameliorated? Thank you.
HOCK TAN, PRESIDENT AND CEO, BROADCOM INC.: Thank you, Jim. That’s a hell of a question, and you’re right on all counts. It’s a multidimensional issue to get an AI data center deployed.
We now are all more sensitive, especially at scale — and the scale we are now delivering at scale to our customers, XPUs, AI data centers built upon XPU computing accelerators. Land, power, and shell, as I indicated to the question with Will, is a big concern. It’s more than a big concern, it dictates specific timing of when this capacity gets deployed and becomes available. But very much in the mix that we have to think about with our customers, and it’s a joint collaborative effort, not just one direction.
It’s cost for one to produce the chip, produce and get the availability of those chips, and the time it comes in. Then even deeper than that, we talk about substrates, which is a specific issue, which is leading us to build our own substrate capacity at scale in our factory in Singapore, jointly with one of our partners. And of course, we all know about memory, HBM memory, and beyond HBM memory, the system memory that goes into AI servers, which we don’t necessarily supply, but our customers have to secure too. So all these — it’s a multidimensional problem coming from various sources, and then depending on different times, each might become a bottleneck. And so it’s a constant, interesting challenge as we work this through, which is why in some ways, I’m so glad we have only six customers to deal with.
OPERATOR: Thank you. Our next question, that will come from the line of Vijay Rakesh with Mizuho. Your line is open.
ANALYST: VIJAY RAKESH – MIZUHO: Yeah. Hi. Thanks, Hock and Amie. Just a quick question. Thanks for giving the visibility on fiscal 2027 and fiscal 2028 AI revenues. Just a quick question. As you go through subsequent generations of XPU, can you talk to how your dollar per gigawatt should improve into the subsequent XPU generations?
And, also, I saw your CapEx went up. Just wondering if you’re adding capacity on the EML, CW, indium phosphide side. Thanks.
HOCK TAN, PRESIDENT AND CEO, BROADCOM INC.: Well, Charlie, you want to take the CapEx issue?
CHARLIE KAWWAS, PRESIDENT, SEMICONDUCTOR SOLUTIONS GROUP, BROADCOM INC.: Sure. So on the CapEx side, as we’ve been sharing with you, Hock and I, for several quarters, we continue to invest in our factories. Substrate is what Hock talked about, which was actually going into production shortly. But also, our EML, CW, and VCSEL factories, our indium phosphide factories, both in the U.S. as well as in Singapore, we’re actually more than tripling them year on year. So we’ve already expanded the capacity for this year, and we’re increasing it significantly for the next two years, and that’s part of what you actually are seeing in CapEx. And this one, I indicated in my remarks too, which is, demand for lasers, whether it’s EML lasers or CW lasers, is fast surpassing supply out there in the industry.
So we are doing a part to double down actually on capacity with a fairly substantial share of this market. So to us, in our interest, we enable this ecosystem of growth.
HOCK TAN, PRESIDENT AND CEO, BROADCOM INC.: On your earlier question, dollars per gigawatt, it’s very interesting what you’re saying, because keep in mind something that is very interesting too, which is, you’re right, with every generation of XPU or GPU, the performance increases, and therefore, the silicon goes for the leading edge, more expensive to produce.
And so ASPs go up per XPU and per GPU. But keep in mind, as they become higher performance, their power increases per chip, per XPU or GPU, which means there’s less of a more advanced XPU in one gigawatt. So what we are seeing per gigawatt is in the range of less than $30 billion, $20 billion to $30 billion per gigawatt. And we expect that to be very sustaining at that level because the power of each chip goes up. So even as we increase the price of the chip, the content in dollars is relatively stable.
Just accept the fact that there’s going to be a lot more gigawatts out there. But the dollars per gigawatt will remain at the $20 billion to $30 billion level of our content, but we have seen and we expect to see an acceleration in the number of gigawatts just to address the exponential compute demand required by our customers.
ANALYST: VIJAY RAKESH – MIZUHO: Got it. Thanks. Very interesting, Hock and Charlie.
HOCK TAN, PRESIDENT AND CEO, BROADCOM INC.: Thank you.
OPERATOR: Thank you. That is all the time we have today for Q&A. I would now like to turn the call back over to Ji Yoo for any closing remarks.
JI YOO, HEAD OF INVESTOR RELATIONS, BROADCOM INC.: Thank you, Sherry.
This quarter, Broadcom will be presenting at the Goldman Sachs Communacopia and Technology Conference on Tuesday, September 8. Broadcom currently plans to report its earnings for the fourth quarter and fiscal year 2026 after close of market on Wednesday, December 9, 2026. A public webcast of Broadcom’s earnings conference call will follow at 2 p.m. Pacific.
That will conclude our earnings call today. Thank you all for joining. Sherry, you may end the call.
OPERATOR: Thank you all for participating. This concludes today’s program. You may now disconnect.
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