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


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Q & A

[Operator Instructions]. Our first question comes from Harlan Sur with JPMorgan.

Harlan Sur

Good afternoon, and thanks for taking my question. One of the areas, obviously, which has been a strong growth driver for the team in 2019, as you mentioned Hock, has been cloud and hyperscale datacenter networking and compute acceleration that Tomahawk, Trident and Jericho, your compute and security acceleration ASICs and and the new optical connectivity portfolio. There was a bit of pause in cloud spending in the first half of this year, but it looks like that that is starting to reaccelerate and looking to be strong in 2020. You also have the start of the 400 gig upgrade cycle. So for fiscal '20, how do you see the datacenter part of your semi franchise performing relative to 2019. Is this going to be another strong year?

And then just secondarily, one of your customers Cisco just announced that they're getting into the merchant silicon market for cloud networking. You guys have a strong position here and in fact have helped these guys both merchant and ASICs on their networking platforms would be great to get your views on this customer now as a potential competitor.

Hock E. Tan

Well, let's start with the first part of your question, which is how do we see 2020 business for networking. And there are two parts to each of these as you know there is the cloud guys service provider, the cloud guys and there is the more traditional enterprise. And we see spending in the cloud guys as you correctly pointed out, stepping up more and more in 2020. We've seen some of it this year calendar -- in the latter part of calendar '19 in investment in storage, and we will start to see in 2020 spending on networking to start ramping up, especially with regard to 200-gigabit and 400-gigabit especially in the second half of the year, which would be great for us because of our product portfolio Tomahawk 3 and even Trident 4 in these areas as well as of course [indecipherable].

So to us, we see 2020 as continued growth momentum in -- basically in our data center business, especially where it relates to cloud. In enterprise, we are not so sure. Enterprise has clearly taken a pause second half of '19, calendar '19, and we see that pause probably continuing for a while in to '20 before possibly in our thinking slowly recovering later half of 2020 for enterprise and that's -- there is a clear difference in their spending. And with respect to one of our very good customers, turning into -- coming into merchant silicon with the recent announcement I think yesterday on one silicon or the Silicon One in the router 8000, I think it's -- we welcome that because it validates a couple of things we've been pushing for years. One of which is that they will be and there has been and will be more and more disaggregation of software, the operating system