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Google Discussed Dropping Broadcom as AI Chips Supplier

A smartphone with a displayed Broadcom logo is placed on a computer motherboard in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration/File Photo
A smartphone with a displayed Broadcom logo is placed on a computer motherboard in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration/File Photo
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Google Discussed Dropping Broadcom as AI Chips Supplier

A smartphone with a displayed Broadcom logo is placed on a computer motherboard in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration/File Photo
A smartphone with a displayed Broadcom logo is placed on a computer motherboard in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

Alphabet-owned Google has discussed dropping Broadcom as a supplier of artificial intelligence (AI) chips as early as 2027, The Information reported on Thursday, sending Broadcom shares down 5% in premarket trading.
If that happens, Google will design the chips - known as tensor processing units - in-house, the report said, adding that executives set a goal earlier this year to ditch Broadcom following a standoff between the companies over the price Broadcom was charging for the chips, Reuters said.
Broadcom CEO Hock Tan recently said that generative AI could account for more than 25% of the company's semiconductor revenue next year.
Google has intensified investments in generative AI this year as it plays catch-up after Microsoft-backed OpenAI's launch of ChatGPT last year took the tech world by storm.
The Information also said that Google has been working since last year to replace Broadcom with chipmaker Marvell Technology for an advanced chip internally code-named Granite Redux.
Google, Broadcom and Marvell didn't immediately respond to a Reuters request for comment.

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Dell Forecasts Downbeat Fourth-Quarter Revenue on PC Weakness

The logo of Dell Technologies at the Milipol Paris, the worldwide exhibition dedicated to homeland security and safety, in Villepinte near Paris, France, November 15, 2023. (Reuters)
The logo of Dell Technologies at the Milipol Paris, the worldwide exhibition dedicated to homeland security and safety, in Villepinte near Paris, France, November 15, 2023. (Reuters)
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Dell Forecasts Downbeat Fourth-Quarter Revenue on PC Weakness

The logo of Dell Technologies at the Milipol Paris, the worldwide exhibition dedicated to homeland security and safety, in Villepinte near Paris, France, November 15, 2023. (Reuters)
The logo of Dell Technologies at the Milipol Paris, the worldwide exhibition dedicated to homeland security and safety, in Villepinte near Paris, France, November 15, 2023. (Reuters)

Dell forecast fourth-quarter revenue below Wall Street expectations on Tuesday, weighed down by weaker demand for its traditional PCs and competition from rival server makers, sending its shares down more than 10% in extended trading.

Despite booming demand for the company's AI-optimized servers used to handle large artificial intelligence workloads, Dell's PC segment has been grappling with stiff competition from rivals and weak consumer spending amid an uncertain economy.

Enterprise customers are being mindful of their PC and IT spending in the short term, Dell executives said on a post-earnings conference call, adding that the company's consumer business was weaker than expected.

Dell forecast fourth-quarter revenue between $24 billion and $25 billion. The average analyst estimate is $25.57 billion, according to data compiled by LSEG.

"The entire PC market is in a transition period and moving towards on-device AI functionality which still isn't that defined and is expected to solidify in 2025," Gadjo Sevilla, senior analyst for AI and Tech at Emarketer, said.

Revenue from Dell's client solutions group, which houses its PC business, came in at $12.13 billion, below expectations of $12.43 billion.

Rival PC maker HP also provided a weak first-quarter profit forecast, while electronics retailer Best Buy trimmed its annual forecasts against the backdrop of weak consumer electronics demand.

Investors are also keenly eyeing Dell's costs after the company flagged in May that higher expenses to build AI-heavy servers and competitive pricing would hurt its margins.

"Interest in our portfolio is at an all-time high, driving record AI server orders demand of $3.6 billion in Q3 and a pipeline that grew more than 50%," Dell's Chief Operating Officer Jeff Clarke said on Tuesday.

Revenue from the company's infrastructure solutions group unit, which houses its AI servers business, rose 34% to $11.37 billion and beat estimates.

Dell reported revenue of $24.37 billion in the third quarter, missing estimates of $24.67 billion.