Broadcom files 8-K: creation of a material debt / off-balance-sheet obligation
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On October 26, 2026, Broadcom Inc. (the “Company”) arranged for financial partners to take on a portion of certain agreements to purchase AI racks based on custom AI accelerators designed by the Company and the related lease agreements with the Company’s customer that enable the deployment of compute capacity.
In connection with this arrangement, the Company is providing residual value support to a newly formed special purpose vehicle (the “Backstop”). The Backstop is a contingent liability the Company believes has a low probability of occurring, supported by the expectation of a strong profitability trajectory of the customer and the sustaining value of the underlying assets. The total amount of the Backstop increases as the AI racks are delivered and deployed and decreases as the customer makes payments on its lease obligations.
In the event of a lease default by the customer, the remedies to limit the Company’s liability exposure include the assumption of the applicable lease, reselling the AI racks back to the seller at a fixed price under certain conditions, or arranging a sale of the applicable AI racks. The Company’s potential liability under the Backstop will be equal to any difference between 72.5% of the outstanding amounts owed on the lease and the value of the AI racks received upon the sale of the assets at that time. The Company’s maximum potential liability under the Backstop upon the deployment of the AI racks, on an undiscounted basis, is approximately $43 billion.
Broadcom Inc.