Broadcom Limited (NASDAQ:AVGO) Q4 2019 Earnings Conference Call - Final Transcript

Dec 12, 2019 • 05:00 pm ET


Broadcom Limited (NASDAQ:AVGO) Q4 2019 Earnings Conference Call - Final Transcript


Loading Event

Loading Transcript

Hock E. Tan

today, we are increasingly thinking about it as a core and surplus semiconductor business that consists of networking, broadband, and storage connectivity products, focus on enterprise service providers and cloud infrastructure. Here, we get a lot of strategic synergies and scale across our end markets with our customers and with our core silicon technology. This in turn drives efficiencies in our sales, R&D, and supply chain activities.

Our infrastructure software businesses, which focus primarily on large enterprises are in fact quite complementary and enhance this core semi businesses by bringing us closer to our end customers. This gives us a natural barrier to entry and gives us comfort that we can drive sustainable revenue growth and improved profitability long-term. Alongside these core semiconductor businesses, we have several valuable semiconductor businesses that are much more stand-alone in nature, due to their unique customers, technology and supply chain characteristics. Now, this will include our wireless businesses and our industrial businesses.

We don't have the same kind of synergies with this as we do in our core semi business. Increasingly, we view this as a small financial assets, especially in terms of capital allocation, balance sheet optimization, and how we chose to leverage resources and manage the company.

Turning to our current assessment for our core semi business, it is extremely positive. We believe we are uniquely positioned with an industry-leading portfolio extending connectivity across enterprise telcos in cloud, in data center switching and routing, when they bring the cloud with the transition to 400-gigabit per second. We also just announced 800-gigabit per second, which further demonstrates our leadership in this space by far. In 5G cellular infrastructure, we are leveraging our incident technology to bring the network to the edge in OpenRAN, all regularized networks through a combination of custom and standard products across both analog and digital domains.

And as we know, a smallest loss for computing starts to slow down as it has. We continue to gain momentum in developing and delivering [indecipherable] accelerators to offload computing for the cloud service providers across an increasing variety of workloads. Initially, virtualization, hypervisors and extending today to AI security encryption and video transcoding. And in the wireless access and enterprise and home gateways, we are of course leading the market transition to WiFi 6. And finally, we actually do have now [indecipherable] Integrated Silicon Photonics effort underway combining our capabilities in switching, with our strong legacy in fiber optics for next generation cloud and networking architectures.

So in summary, we plan to increase our investment in our core semiconductor businesses to position ourselves for expected future growth opportunities, where we can leverage our scale of investment, industry-leading focus execution and breadth of IP. Now, we all know it has been a tough year for semiconductors in general. We filed semiconductor segment down approximately 8% as I indicated, but if you look at our core semi business as I defined it, is they have held up reasonably well. To put some numbers around