According to J.P. Morgan analysts, Facebook parent Meta Inc. will use Broadcom Inc.‘s custom chips to develop its metaverse hardware, becoming the chipmaker’s next billion-dollar ASIC customer.
Broadcom’s ASIC (application-specific integrated circuit) chips will generate $2 billion to $2.5 billion in revenue this year, according to analysts, thanks to deals with Meta and partnerships with Alphabet and Microsoft.
“We believe these wins are primarily at 5 nanometres and 3 nanometres and will be used to power Meta’s metaverse hardware architecture that it will deploy over the next few years,” analyst Harlan Sur said.
Meta is heavily investing in the metaverse, a virtual space where people communicate, work, and play, by adding new capabilities to hardware devices that serve as virtual world access points.
Sur added that, after Google, Meta will become Broadcom’s next $1 billion-a-year ASIC customer in the next three to four years. ASICs are meant to efficiently perform hyper-specific tasks, such as AI and machine learning.
Since 2016, Broadcom and Google have collaborated on Google’s custom chip for machine learning tasks, which the brokerage thinks will be worth more than $1.3 billion in 2022.
Meta is working on a range of metaverse technology, such as smart glasses and virtual reality headsets, and has even created its own physical store where customers can check out these and other products.
“Near-term ASIC program pipeline is strong as we believe Broadcom will be ramping Meta/Facebook and Microsoft ASICs this year,” Sur added.
Broadcom’s semiconductor solutions business, which develops custom chips, generated about $27.5 billion in revenue in 2021, accounting for more than 70% of the company’s total revenue.
