When a trillion-dollar company rises like this, it must be taken seriously. Domestically, we've gotten to the edge, but we haven't grasped the key points

Wallstreetcn
2024.12.17 00:36
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Broadcom's market value has exceeded one trillion dollars, and its stock price has recently seen significant increases, especially due to first-quarter performance exceeding expectations, primarily benefiting from the rapid growth of AI connectivity business. Although the domestic market has reacted to this opportunity, it has not yet fully grasped the key points. The core products of AI connectivity include Ethernet chips, Retimer chips for internal cabinet connections, and copper connection cables. Broadcom has gained an advantage in the market, becoming the preferred choice for cloud vendors

As a company with a market value of over one trillion dollars, Broadcom rose 25% on the last trading day and is up over 7% today. This is already a strong signal that absolutely cannot be ignored; it is key information. Especially with a significant trend change in the first quarter, the unexpected performance in the first quarter must be emphasized because this will be a major opportunity in the industry.

This is definitely not comparable to those small stocks manipulated by speculative funds.

Last night (Sunday), I held a meeting with my Knowledge Planet members to interpret Broadcom's industry trends, and today the domestic market also reacted, with several companies in AEC rising by 20%.

It should be said that the domestic market has grasped this opportunity.

However, I believe they have not grasped the most critical point.

Firstly, Broadcom's performance exceeding expectations is absolutely not just about the custom ASICs competing for NVIDIA's GPU market share. The unexpected performance is more due to AI connectivity, as expressed by the company's CEO, with the AI connectivity business represented by Ethernet growing fourfold year-on-year, which is several times faster than the growth rate of the company's custom ASIC business.

Moreover, this state (the growth rate of AI connectivity exceeding that of custom ASICs) will continue until the first half of fiscal year 2025.

This AI connectivity is divided into two parts: 1) Internal connections within the cabinet, and 2) Connections between cabinets.

1) Internal connections within the cabinet use PCIe retimer and switch chips, as shown in the figure below. The significant growth in the performance of US stock ALAB is mainly due to retimer chips.

2) Connections between cabinets use Ethernet. As shown in the figure below:

Furthermore, Broadcom has used Ethernet to defeat NVIDIA's InfiniBand, gaining a larger market share and becoming the preferred choice for several major cloud providers, with its three major advantages illustrated in the figure below:

So to summarize the most critical core products connected to AI: First is Ethernet chips and circuits, Second is DACs with Retimer chips used for internal cabinet connections and expansions (because it becomes AEC only with the retimer chip, where A stands for Active), Third is copper connection cables.

For the widely recognized and valued XPU, the key point is not the custom design itself, but rather the integration and packaging.

As shown in the figure below, this XPU has two unique features:

  • Integrates HBM into a single large chip

  • Stacks XPU as well (which NVIDIA's GPU does not have) (the yellow part above also has PCIe)

This means that Broadcom's custom ASIC has typical differences from NVIDIA's current GPU packaging (of course, NVIDIA's next generation will also move in this direction).

Several high-performance, high-speed, and high-bandwidth chips, including HBM, must be squeezed together, even stacked on top of each other and packaged in a cramped space, where internal electromagnetic compatibility (EMI) and heat dissipation are the most critical points. Note that it is internal EMI and heat dissipation, not external! Originally, HBM chips internally required some high-end low-alpha ball silicon and low-alpha ball aluminum specifically to address internal EMI and heat dissipation issues. Now, with a volume increase of hundreds of times and higher quality requirements, it is reasonable that the value of these high-end fillers (low-alpha ball silicon and low-alpha ball aluminum) has increased exponentially.

Final conclusion:

  1. As a trillion-dollar company, Broadcom's growth starting from the first quarter is beyond expectations, and you must pay attention to it, as this will be a major trend for several years;

  2. The key points that should be understood in order of importance are: A) High-end fillers for internal EMI and heat dissipation in chips; B) Ethernet chips and circuits; C) Retimer chips; D) Copper connection cables.

Source: Liu Xiang Technology Research, original title: "A trillion-dollar company is growing like this, and you must pay attention. The domestic understanding is on the edge, but the key points have not been grasped." Risk Warning and Disclaimer

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