Broadcom CEO Hock Tan has been a 20-year rainmaker for investors—with dividends, the shares are up 34,000%. What is striking is how his approach has changed over the years. Or has it?
At first, Broadcom looked like a private-equity shop disguised as a chip conglomerate. It bought dominant, mature companies, stripped away costs, and raised prices on their products. As smartphones took over, Broadcom became a key supplier of their innards, including radio frequency modules. Tan, 74, then put his chip playbook to work on enterprise software.
In the AI era, Broadcom holds the best hand this side of Nvidia. Its application specific integrated circuits, or ASICs, were previously a niche product for users with unchanging workloads—video processors or crypto miners. With AI, hyperscale customers who know exactly what they want can use Tan’s ASICs as a scalpel, rather than turn to the Swiss Army knife of Nvidia’s general-purpose chips. That allows these big spenders to buy only the silicon they will fully use, which keeps their power consumption down.
Other product lines Tan has brought together, including data-center switches and software, are siphoning even more AI economics toward Broadcom. Profit is projected at $57 billion for the fiscal year through October, a two-year double, and longer forecasts have it doubling again over the following two years.
