Broadcom shares fall as chip sales disappoint

Broadcom reported semiconductor solutions revenue of $4.90 billion for its fiscal first quarter ended Jan. 31, slightly below analyst estimates of $4.95 billion, according to IBES data from Refinitiv. Shares of the chip company, which is a major supplier to iPhone maker Apple Inc, were down 1.9% at $435 in extended trading.


Reuters | California | Updated: 05-03-2021 12:52 IST | Created: 05-03-2021 03:48 IST
Broadcom shares fall as chip sales disappoint
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Shares of Broadcom Inc fell on Thursday after the company reported chip sales slightly below Wall Street estimates, joining a growing list of chip industry peers hit by the global semiconductor shortage. Broadcom reported semiconductor solutions revenue of $4.90 billion for its fiscal first quarter ended Jan. 31, slightly below analyst estimates of $4.95 billion, according to IBES data from Refinitiv.

Shares of the chip company, which is a major supplier to iPhone maker Apple Inc, were down 1.9% at $435 in extended trading. Kinngai Chan, the analyst at Summit Insights Group, said an industry-wide shortage of substrates - the raw silicon discs used to make chips - has hit Broadcomm harder than others because some of its chips are physically large, especially in the data center space. That meant the company's chip revenue fell short of expectations despite strong smartphone sales from Apple.

“While we had anticipated some challenges in the supply chain for Broadcom in the January quarter, its semiconductor business performance did underperform its large-cap peer group in spite of the stronger-than-seasonal wireless business." Broadcom forecast second-quarter revenue of about $6.5 billion, compared with analysts' estimates of $6.33 billion, according to IBES data from Refinitiv.

For the fiscal first quarter, Broadcom's infrastructure software business had sales of $1.74 billion, beating Wall Street estimates of $1.64 billion, according to Refinitiv data. The strong software revenue helped overall sales rise to $6.66 billion in the fiscal first quarter from $5.86 billion a year earlier. Overall first-quarter sales beat analyst expectations of $6.62 billion, according to IBES data from Refinitiv. Excluding items, the company earned $6.61 per share in the fiscal first quarter, beating analysts' estimate of $6.56 per share.

A ramp-up in 5G technology adoption is expected to boost demand for higher-priced chips used in phones and is likely to benefit semiconductor firms such as Broadcom. The company, which also makes chips for data centers and servers, also stands to benefit from an extended remote working trend as people wait for vaccines to roll out.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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