Chip market peak not over yet, says Broadcom CEO, with millions of accelerator clusters in the offing
Broadcom CEO Hock Tan predicts that demand for AI clusters will continue for another three to five years as enterprises continue to struggle with the resource- and energy-intensive computing needs of AI.
In an interview with Jim Cramer on CNBCMad Money’s Tan explained how customers plan to build increasingly larger AI clusters, doubling in size with each new generation of machines.
The forecast suggests a steady increase in demand for custom AI silicon and other advanced semiconductors, which Tan sees as favorable for Broadcom.
Tan explained that the continued development and advancement of large language models means that large-scale builds will be needed annually to keep up with the pace. As such, hyperscale AI clusters, which currently use 100,000 accelerators, could one day grow to a million accelerators, Tan believes.
To get a piece of the action, the company plans to design and supply key components, including custom XPUs, to meet demand. XPUs are expected to grow faster than traditional GPUs in the future, and as has been proven time and time again, early entry into the market counts for a lot.
Nvidia, one of the first companies to invest heavily in AI chips for data centers, was briefly the most valuable company in the world. It currently ranks third with a market cap of $2.78 trillion.
Broadcom’s recent AI revenue guidance was raised to $12 billion for fiscal year 2024, reflecting continued strong demand from the technology sector.
Additionally, Tan touched on the pandemic-induced chip shortage and the state of non-AI semiconductor production and demand globally, indicating that recovery in the segment could occur in 2025 or 2026. The CEO also noted that there is strong demand for Wi-Fi and storage connectivity products.
