Broadcom’s AI Semiconductor Growth Set to Continue Through 2027
Broadcom’s foray into the realm of artificial intelligence (AI) semiconductors is anticipated to sustain its remarkable growth trajectory extending into fiscal 2027.
With major technology enterprises, including Google and Meta, intensifying their proprietary AI chip development efforts, Broadcom’s revenue stemming from AI innovations is projected to soar to $116 billion (approximately 160.5 trillion won) by fiscal 2027.
In a preview report released on the 19th, ahead of Broadcom’s forthcoming earnings announcement, global investment bank Citi has forecasted this significant revenue milestone.
Broadcom is slated to unveil its third-quarter results for fiscal 2026, covering the May to August period, on the 2nd of next month.
Citi has affirmed its “Buy” rating for Broadcom, accompanied by a price target set at $500. The bank observed that investor attention is likely to pivot toward the 2027 AI business outlook rather than the immediate quarterly specifics.
Moreover, Citi estimates Broadcom’s aggregate revenue for fiscal 2027 will reach $166.5 billion (approximately 230.4 trillion won).
Should this projection materialize, around $7 of every $10 in total revenue is expected to originate from the AI segment.
Central to this robust expansion are application-specific integrated circuits (ASICs) meticulously designed for AI services by tech behemoths like Google and Meta. Broadcom specializes in creating ASIC designs tailored specifically to these firms’ needs.
Citi forecasts that Broadcom’s revenue share from AI ASICs will climb to 44% in the upcoming October quarter, eventually exceeding 55% by the latter half of 2028.
Within the total projected AI revenue for fiscal 2027, Google and large language model (LLM) enterprises alone are projected to account for an impressive $90.3 billion (approximately 125 trillion won).
Nevertheless, the principal concern pertains not merely to the demand for AI chips but rather to the availability of data centers and the requisite power for their operation.
Delays in constructing data centers, securing power resources, and obtaining regulatory clearances could potentially postpone some AI investments into 2028.
Essentially, despite an abundance of customers requiring AI chips, the necessary infrastructure for their deployment may not be fully operational in time.
Strategic Partnership with Samsung Electronics
Broadcom’s ambitious AI growth is intricately linked to a strategic alliance with South Korea’s Samsung Electronics (005930.KS).
Last month, the two entities formalized a memorandum of understanding (MOU) to explore collaborative opportunities exceeding $200 billion (approximately 276.8 trillion won) over a five-year horizon, extending through 2030, primarily in the memory and foundry sectors.
This collaboration encompasses advanced memory solutions such as high-bandwidth memory (HBM), sub-2-nanometer (nm) foundry processes, and cutting-edge packaging techniques.
Citi anticipates that as Broadcom’s AI ASICs grow increasingly sophisticated, the HBM capacity integrated within each chip will also expand.
The correlation indicates that growth in Broadcom’s AI chip sales will coincide with an uptick in HBM content per unit.
Following the announcement of this cooperation, Reuters reported that securing Broadcom’s production volumes could enhance utilization rates at Samsung Electronics’ advanced semiconductor facilities, thus bolstering its foundry operations. Additionally, this partnership may help Samsung narrow the competitive gulf with market leader TSMC.
Further optimism surrounds the memory sector. According to Barron’s analysis, JPMorgan has predicted that “Samsung will retain its status as a pivotal HBM supplier for Broadcom.”
Furthermore, they project that over the next five years, 90–95% of Broadcom’s semiconductor procurements from Samsung will be memory-based, with a mere 5–10% focused on foundry wafers.
Samsung’s performance in the foundry domain has also demonstrated signs of recent improvement. As per a report from Reuters, Samsung Electronics has uplifted prices for new orders on certain advanced nodes, including 4nm and 5nm, by as much as 15%, driven by the escalating demand for AI semiconductors.
This shift suggests that as TSMC’s production capacity becomes constrained, orders are being redirected to other competitors like Samsung Electronics.
Marvell’s Google Agreement Highlights Competitive Dynamics
In a shifting competitive landscape, Marvell Technology (MRVL) has announced an expanded partnership with Google on the 19th.
Marvell will now develop a variety of custom chips for Google’s AI frameworks, issuing warrants for up to 58.97 million shares at $206.58 per share, which totals an approximate value of $12.2 billion (around 16.9 trillion won).
Significantly, these warrants do not impose an immediate financial obligation on Google. Marvell’s Securities and Exchange Commission (SEC) filing revealed that only approximately 1.4 million shares will be allocated to Google within the first year, with the rest contingent upon revenue performance.
Each block of shares becomes accessible for every $500 million (approximately 690 billion won) in custom chip revenue generated by Google from fiscal Q3 2027 to fiscal 2033.
To fully unlock the potential equity stake, Google would need to procure roughly $120 billion (approximately 166.1 trillion won) in Marvell products over this timeframe.
Traditionally, Google has heavily depended on Broadcom for collaborative design on its proprietary AI chip, the Tensor Processing Unit (TPU).
This new agreement introduces Marvell as a second significant supplier. Notably, Marvell has previously crafted custom silicon for Amazon (AMZN) and Microsoft (MSFT), thus solidifying its relevance across all three major U.S. cloud platforms.
Following the announcement, Marvell shares surged about 10% to a close near $234, whereas Broadcom shares declined by roughly 4–5%.
However, Broadcom retains a long-term contract with Google that extends through 2031, suggesting that Marvell’s entry serves more as an additive competitive force rather than a direct replacement.
Morningstar analyst William Kerwin characterized this agreement as a significant achievement for Marvell, noting that Google is not severing ties with Broadcom but rather diversifying its supplier base.
Market Implications and Future Outlook
With Broadcom’s AI business poised for continued expansion, Samsung Electronics stands to benefit significantly from opportunities in both HBM and foundry sectors.
It is estimated that Big Tech’s investment in AI infrastructure will surpass $700 billion (approximately 968.7 trillion won) this year, with increasing AI chip demand directly leading to heightened HBM content within each unit.
Nonetheless, Marvell’s new partnership with Google may present a longer-term challenge to Broadcom’s entrenched position within the AI ASIC market.
Although Broadcom continues to play a pivotal role in Google TPU design, the competitive landscape is expected to intensify as Marvell ventures into areas such as inference accelerators, storage controllers, networking hardware, and memory technologies.
As the month progresses, investors will undoubtedly turn their attention to Broadcom’s earnings unveiling on the 2nd and Marvell’s quarterly results on August 27.
Analysts have indicated that insights from Marvell’s management regarding Google’s demand will likely hold more significance than the headlines surrounding the warrants.
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