By Sam Boughedda
Semiconductor chip company Broadcom's (NASDAQ:AVGO) custom chip (ASIC) design pipeline is accelerating at Meta/Facebook (NASDAQ:FB), JPMorgan analyst Harlan Sur told investors in a note Tuesday.
The analyst wrote that as Meta starts to execute on its metaverse hardware infrastructure architecture, it will require significant silicon compute capabilities in the areas of AI/ML, video processing, and high-speed networking. As a result, Sur believes Broadcom has secured several ASIC wins with the social media company.
Meta is making a big play in the metaverse with its Oculus headsets, although it has so far run into issues with user retention, although that hasn’t stopped its investment in the space.
"We believe Broadcom is ramping video transcode ASICs into Meta/Facebook in the 2H of this year and AI/ML processors and DPU chips in the 2023/2024 time frame," said Sur.
"All totaled, we believe that Meta/Facebook will emerge as Broadcom’s next $1B+/year cloud ASIC customer over the next 3-4 years," he added.
Furthermore, they believe Broadcom will be "ramping Google’s 5th gen (TPU v5 at 5nm) in the 2H of this year."
"All totaled, we believe that Broadcom’s cloud accelerated compute ASIC revenues will drive $2-$2.5B in revenues this year – Google (NASDAQ:GOOGL), Meta/Facebook, and Microsoft (NASDAQ:MSFT) we believe are the primary drivers. Overall, we believe the $11-$12B high-end custom ASIC chip market is growing at a 12-15% CAGR over the next few years and Broadcom (#1 mkt share) and Marvell (NASDAQ:MRVL) (#2 market share) will continue to be the primary beneficiaries," the analyst concluded.