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Broadcom Inc. CEO Hock Tan said Wednesday the company is helping finance custom artificial intelligence chips for large language model developers, highlighting the enormous infrastructure costs facing AI companies such as Anthropic and OpenAI as they race to scale their models.
In the company’s second-quarter earnings call on Wednesday, Tan said Broadcom was partnering with Apollo Global Management and Blackstone to create an AI XPU platform that will fund custom AI chips for LLM developers, helping them secure the massive computing capacity needed to train and deploy increasingly advanced AI models.
Apollo, Blackstone To Help With Financing
The initiative is expected to deploy more than 20 gigawatts of compute capacity by 2028, with Apollo launching the platform’s first $35 billion tranche.
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Tan said the effort is aimed at addressing rapidly growing demand from AI customers, which are consuming increasingly large volumes of tokens as model usage scales.
“….creating in partnership with guys, with the best balance sheets around, a vehicle to basically have these chips funded for these LLM players who otherwise might have difficulty getting access to our technology, which provides them with the lowest power and the lowest cost,” Tan added.
AI Customers Lock In Compute Capacity Years In Advance
Securing AI computing capacity now requires years of planning, with customers needing to coordinate chip production, memory supply, power availability and data center infrastructure before deploying new systems.
Broadcom’s customers are placing orders well ahead of deployment timelines, Tan said, giving greater visibility into future demand than is typical in the semiconductor industry.
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He added that the demand visibility now extends through 2028, compared with 2027 just three months ago, reflecting growing confidence in long-term AI infrastructure spending.
Broadcom’s earnings, outlook top analysts’ expectations
Broadcom topped earnings expectations in the second quarter, reporting adjusted earnings of $2.44 per share versus analyst estimates of $2.40 per share. Revenue was $22.19 billion, narrowly missing consensus expectations of $22.27 billion.
The company also issued a strong outlook, projecting third-quarter revenue of roughly $29.4 billion, above estimates of $28.54 billion, and adjusted EBITDA equal to about 68% of revenue.
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