Broadcom CEO Hock Tan offered no updates about when the pending merger between his company and VMware might be done during an earnings call last week where he revealed a winning frame for the chip giant and continued to talk about generative AI stirring up demand.
The San Jose, California-based semiconductor manufacturer said it still thinks the deal with VMware will close in 2023.
Tan said Broadcom sees a massive revenue upside around the demand for generative AI products as it relates to the company's semiconductor business.
He explained demand has been ramping and by fiscal 2024, products made for AI could account for a quarter of Broadcom's semiconductor revenue.
"I know you all want to hear about how we are benefiting from this strong deployment of generative AI by our customers," Tan told investors.
"Put this in perspective, our revenue today from this opportunity represents about 15 per cent of our semiconductor business.
"Having said this, it was only 10 per cent in fiscal 2022. And we believe it could be over 25 per cent of semiconductor revenue in fiscal 2024."
Broadcom's revenue for the second quarter 2023 was $8.7bn, up eight per cent year on year.
Net income was $3.4bn for an earnings per share that came in at $8.15, up $2.22 from a year ago.
Tan said Broadcom sees growth across the rest of its business as well, but added it is augmented by demand for AI products as well.
"It's not entirely all our growth," he said. "I would say at least half the growth is still on our traditional business. The other half may be out of generative AI."
On the VMware deal
Regarding the pending VMware acquisition, which was first announced about a year ago, Tan said the $61bn deal is still winding through regulators around the world.
He said the proposed merger received legal clearances in Australia, Brazil, Canada, and South Africa, and Taiwan.
Canadian officials told CRN that while the deal has been approved there, authorities can still contest the merger for up to a year after it closes if the it was found to result in anti-competitive practices.
"We still expect the transaction will close in Broadcom's fiscal 2023," Tan said.
"The combination of Broadcom and VMware is about enabling enterprises to accelerate innovation and expand choice by addressing their most complex technology challenges in this multi-cloud era.
"And we are confident that regulators will see this when they conclude their review."
Last month, Broadcom and VMware opted to push the outside date to 26 August.
If the deal isn't closed by then, both sides would push the outside date to 26 November, which is after the end of Broadcom's fiscal year.
Meanwhile regulators in the US, the European Union and the UK are each undertaking deep investigations to determine if a merger between Broadcom and VMware would harm competitors or the market.
There are hearing dates in the UK and in the European Union this summer.
Both agencies have stated they believe the merger could hurt competition by limiting Broadcom's competitors' access to VMware.
The FTC, which is reviewing the merger in the US, has said it has no comment.
