Recently, Broadcom, an American chip company listed on the US stock market, witnessed a substantial surge in its share price following the release of its financial report. The share price jumped by 24% and 8% over two consecutive days, propelling its market value beyond the $1 trillion mark for the first time (current market value: $1.17 trillion). This achievement positions Broadcom as the ninth company globally and the third in the semiconductor sector to attain a market value exceeding $1 trillion.

This milestone has generated significant buzz in the capital markets, placing Broadcom firmly in the spotlight.

Historically, Broadcom was primarily known for its dominant position in the Wi-Fi chip industry within the communications sector. However, the burgeoning demand for AI computing power has presented Broadcom with unprecedented opportunities.

Unlike NVIDIA and Intel, which specialize in computing chips, Broadcom focuses primarily on networking interconnect chips and stands as the world's largest manufacturer of networking chips. Products such as Ethernet switches, routers, wireless communication devices, Bluetooth, and Wi-Fi rely on at least one Broadcom chip for transmission in virtually all global internet connections.

Broadcom's semiconductor business encompasses 'networking chips' and 'ASIC' (Application-Specific Integrated Circuit) custom chips, both of which have greatly benefited from the current generative AI wave.

In fiscal year 2024, Broadcom's semiconductor business reached a new peak of $30.1 billion, with AI-related business (comprising networking chips and ASIC custom chips) generating $12.2 billion in revenue, marking a year-on-year increase of 220%.

Broadcom CEO Hock Tan announced that the company is collaborating with three major customers to develop ASIC AI chips, projecting the demand for custom AI chips to reach $60 to $90 billion by 2027.

Bernstein analysts noted that Hock Tan's style might even be enhanced by a leather jacket, and this corporate upswing evokes comparisons to NVIDIA and its CEO Jen-Hsun Huang.

While NVIDIA dominates the global GPU market with a 90% share, Broadcom's ascendancy in the field of custom AI chips poses a challenge to NVIDIA. Broadcom's custom AI chips are optimized for specific applications, offering superior data processing and computational efficiency, particularly in AI large model inference efficiency and cost control.

Tech giants such as Google, Amazon, and OpenAI have opted to collaborate with Broadcom to reduce their reliance on NVIDIA GPUs. Rumors even suggest that Apple may join forces with Broadcom to develop AI server chips, underscoring Broadcom's competitiveness in the AI chip sector.

Prior to the market closely scrutinizing Broadcom's potential rivalry with NVIDIA, the two companies had been collaborating closely. Following the launch of ChatGPT in late 2022, there was a global rush to invest in AI data centers, with many tech companies scrambling to procure NVIDIA GPUs to build server clusters. Broadcom's Ethernet switch chips were crucial for data center network communication, enabling both Broadcom and NVIDIA to reap substantial gains in performance and share price amidst the AI boom.

Now, Broadcom's rise signals a shift in the competitive landscape of the AI chip market. With the escalating demand for custom AI chips, Broadcom is poised to challenge NVIDIA's GPUs in this sector, making its future development a continuous area of interest.