Broadcom (AVGO, Financial) has announced the launch of its latest data center switch chip, Tomahawk 6, claiming it offers double the Ethernet switching capacity of any existing market product. This chip is specifically designed for data centers running AI processor clusters. Following the announcement, Broadcom's stock surged nearly 3.3%, pushing its market capitalization close to $1.2 trillion for the first time.
The Tomahawk 6 is built using TSMC's 3nm process, a significant upgrade from the 5nm process used in its predecessor, Tomahawk 5. This advancement reduces the number of network devices required, thereby lowering power consumption and enhancing reliability. Additionally, the chip is constructed on open standards, allowing customers to avoid being locked into proprietary network technologies.
In anticipation of Broadcom's second-quarter earnings report, several Wall Street firms have raised their target prices for the stock. Analysts expect strong performance driven by AI business growth, which could account for about 30% of Broadcom's revenue this year. Despite NVIDIA's dominance in the AI chip market, Broadcom and Marvell Technology are gaining attention for providing custom silicon solutions to major tech clients.
