Broadcom’s revenue forecast disappoints on weakness in chip business

A sign to the campus offices of chip maker Broadcom Ltd is shown in Irvine, California, U.S., November 6, 2017. REUTERS/Mike Blake

(Reuters) – Broadcom Inc (AVGO.O) on Thursday forecast current-quarter revenue, the midpoint of which was slightly below analysts’ estimates as its chip business took a hit from supply chain disruptions caused by the novel coronavirus.

Chief Executive Officer Hock Tan, however, said the outlook for its chip business reflects a surge in demand from cloud, telecom and enterprise customers.

The company reported better-than-expected growth in quarterly revenue, supported by higher demand for chips used in data centers, which are ramping up as more people opt to work from home in the face of the coronavirus crisis.

Broadcom’s second-quarter revenue rose 4% to $5.74 billion in the second quarter ended May 3, beating analysts’ average estimate of $5.69 billion.

The company forecast third-quarter revenue of about $5.75 billion, plus or minus $150 million. Analysts on average were expecting $5.79 billion, according to IBES data from Refinitiv.

Reporting by Ayanti Bera in Bengaluru; Editing by Anil D’Silva