(Reuters) – Broadcom said on Thursday its custom chip unit, which makes AI processors for cloud providers, has developed new technology to improve semiconductor speeds amid escalating demand for generative artificial intelligence infrastructure.
Palo Alto, California-based Broadcom is one of the biggest beneficiaries of high demand for AI-enabled hardware, as so-called hyperscalers turn to its custom chips to diversify their supply chains beyond Nvidia’s expensive processors.
The technology, called 3.5D XDSiP, will enable Broadcom’s custom chip customers to increase the amount of memory in each packaged chip and accelerate performance by directly connecting critical components.
To do this, the company is using manufacturing processes from TSMC, the world’s largest contract chip manufacturer, including chip-on-wafer-on-substrate techniques – also known as advanced packaging – which have limited capacity, making it a major bottleneck in the supply chain for AI chips.
Five products using the new technology are in development, with production beginning in February 2026, Broadcom said.
While Broadcom does not specify which cloud companies it is developing custom chips for, analysts widely believe that Google and Facebook-owned tech giant Alphabet’s Meta Platforms are among its customers.
“Our hyperscale customers continue to scale and expand their AI clusters,” Broadcom CEO Hock Tan said in September, as the company raised its AI revenue forecast to $12 billion for fiscal 2024, up from a previous forecast of $11 billion.
The chipmaker, which also supplies networking equipment for data centers, has three key customers for its custom processor unit, Tan said in September.
Broadcom’s central competitor in this area is Marvell. The total custom chip market could grow to about $45 billion by 2028 and be split between the two companies, Marvell COO Chris Koopmans said Tuesday.
The custom chip market will continue to expand, said Summit Insights senior analyst Kinngai Chan, adding that Marvell and Broadcom would benefit from this trend.
(Reporting by Arsheeya Bajwa in Bengaluru and Max Cherney in San Francisco; Editing by Pooja Desai)
