Broadcom, Marvell Capitalize On Generative AI Demand With Custom ASIC Solutions

The semiconductor landscape is on the brink of a significant transformation, and leading the charge are industry giants Broadcom Inc AVGO and Marvell Technology Inc MRVL.

JPMorgan analyst Harlan Sur predicts that the custom chip (ASIC) market will surge to a $20-30 billion market, achieving a robust 20% CAGR. This growth is expected to be driven by the rapid adoption of generative AI.

Cloud titans like Google‘s parent Alphabet Inc GOOG GOOGL, Amazon.com Inc AMZN and Microsoft Corp MSFT are already pushing the boundaries of technology. They are increasingly leaning towards custom ASIC solutions for their AI compute accelerators. This should trigger a golden era for Broadcom and Marvell, Sur says.

The Custom ASIC Surge

The aggressive shift towards custom ASICs is not just a fleeting trend but a paradigm shift driven by the need for differentiation, superior performance and cost efficiency.

Cloud and hyperscale titans are increasingly opting for custom solutions over off-the-shelf products like Nvidia Corp‘s NVDA H100/B200. They increasingly looking for products offering better performance and lower power consumption, the analyst notes.

This trend is accelerating the demand for custom chip solutions, with Broadcom and Marvell leading the charge, Sur says.

Broadcom: A Steadfast Leader

Broadcom has firmly established itself as the market leader, commanding a dominant 55-60% share. The company’s strategic partnership with Google has been a cornerstone of its success.

Broadcom, having co-designed the last six generations of Google’s TPU family, now plans to ramp up production of the 3nm TPU v6 in the latter half of this year. The next-gen TPU v7 program is also expected to extend their partnership through CY27. This stronghold is not just about maintaining market share but driving exponential revenue growth, Sur says.

Broadcom projects that its AI-related revenues will hit $11 billion this year, fueled by burgeoning orders from Google and Meta Platforms Inc (NASDAQ).

This impressive trajectory underscores Broadcom’s unparalleled ability to deliver cutting-edge AI solutions, tailored to the unique demands of its hyperscale customers, the analyst notes.

Marvell: A Rising Powerhouse

While Broadcom leads, Marvell is swiftly gaining ground as the second-largest player in the custom ASIC market, holding a 13-15% share. Marvell’s strategic wins with Amazon and Google are propelling it forward.

The production of Amazon’s 5nm Tranium chip and Google’s 5nm Axion ARM CPU chip are just the beginning. Marvell is set to make a significant leap as Amazon’s Inferentia ASIC ramps up in CY25 and Microsoft’s Maia in CY26. JPMorgan estimates Marvell’s AI revenues will soar from $1.6-1.8 billion in CY24 to $2.8-3 billion in CY25.

Also Read: Marvell Technology’s Revenues To Recover On AI Demand; These 9 Analysts Dive Into Q1 Results

EDA Companies: The Unsung Beneficiaries

The rise of custom ASICs is also a boon for EDA (Electronic Design Automation) companies like:

• Synopsys Inc SNPS
• Cadence Design Systems Inc CDNS
• ARM Holdings Plc ARM

As the complexity of chip design grows, so does the need for sophisticated design software and tools. These companies are witnessing a surge in demand, driven by the increasing number of chip design starts and the growing roster of chip design engineers. This is creating a virtuous cycle of growth and innovation in the semiconductor industry.

The custom ASIC market’s explosive growth presents a golden opportunity for Broadcom and Marvell. With their strong IP portfolios, leading-edge design capabilities, and strategic partnerships, these companies will dominate the market.

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