Broadcom CEO Hock Tan predicts deployment of millions of AI accelerators globally within coming years.

Broadcom CEO Hock Tan predicted that hyperscale semiconductor customers will continue building AI clusters for another three to five years, with each generation of machines doubling in size. Speaking to Jim Cramer of CNBC's Mad Money on Tuesday, Tan addressed recent stock performance, noting that while Broadcom's Q3 results had sparked concerns about the chips business, market signals subsequently indicated strong demand for custom AI silicon. Tan affirmed he is aware of hyperscalers' roadmaps suggesting a three-to-five year plan "to build out these large clusters" enabling development of new large language models, with those builds potentially occurring annually and each requiring two or three times the compute power of their predecessors.

Tan predicted this will create a larger "compute opportunity" to be met by "XPUs" – AI acceleration silicon for the network and other components – which Broadcom has forecast will grow faster than GPUs in coming years. The Broadcom chief noted that AI clusters hyperscalers are building today use 100,000 accelerators, but future rigs will require a million. Tan indicated Broadcom wants to design these systems specifically for hyperscale customers, a segment he views as his best potential target.

The competitive landscape presents distinct opportunities. Nvidia and AMD are set to contest the GPU market and associated software stacks, while Meta has already signalled a desire to build custom AI silicon to run alongside 600,000 Nvidia GPUs. Nvidia has promised its supply chain can deliver the GPUs the world wants but has a history of sputtering deliveries. If Broadcom can help hyperscalers design rigs that don't depend on known chokepoints, it could thrive.

Tan also observed that the semiconductor market bottomed out this year as part of the industry's normal cycles, and predicted that 2025 and 2026 will be an upcycle for non-AI silicon. When asked if this means sales of Wi-Fi and storage connectivity silicon will improve after respectively achieving stasis and a slump last quarter, Tan said that would "absolutely" be the case. "We are already seeing strong sequential growth from the bottom of Q2 this year," Tan stated, attributing the momentum to demand from enterprises.

Regarding VMware, Tan expressed confidence that his reforms are progressing well. "What we've done is improved the products and made it much more usable from just being compute virtualization to basically creating a virtualization of entire datacenter, on-prem, and creating the cloud experience, on-prem." Cloud Foundation 5.2 for the first time allows virtual compute, storage, and networks to be brought under a single management umbrella, representing around 80 percent of the work Broadcom says is needed to realize its vision of a fully virtualized datacenter.