Broadcom is partnering with Japan based TOPPAN to build advanced substrate manufacturing capacity in Singapore. The joint venture aims to clear persistent supply bottlenecks as demand for custom AI silicon explodes across big tech clients. But the sudden expansion triggered an immediate stock selloff for established Taiwanese substrate suppliers facing new competition.
Taiwanese packaging suppliers took a direct hit following the announcement. Nan Ya PCB plunged straight to the daily limit down. Unimicron, Kinsus, and Zhen Ding saw heavy institutional selling during the same trading session. Major investment funds dumped 7726 shares of Nan Ya PCB, 6984 shares of Kinsus, 1618 shares of Unimicron, and 12340 shares of Zhen Ding. Investors worry that the new Singapore site will eventually absorb future orders that would have otherwise gone to traditional packaging lines.
Hardware industry analysts point out that this capacity expansion does not signal slowing demand. The reality is the exact opposite. As orders for custom application specific chips accelerate, advanced substrate supply has turned into the primary operational chokepoint across the entire semiconductor supply chain.
Broadcom chief executive Hock Tan addressed the production strategy during an earnings discussion with Jefferies analyst Blayne Curtis. Tan explained that Broadcom established Advanced Substrate Technologies, a joint venture with TOPPAN, to install large scale flip chip ball grid array lines in Singapore. The facility is scheduled to begin production in fiscal 2027 to stabilize component flow for high density processors.
Broadcom also raised its forward looking revenue projections to reflect booming orders. The company increased its annual AI chip revenue target to 58 billion dollars, followed by an estimate of 115 billion dollars in fiscal 2027 and 230 billion dollars in fiscal 2028. That marks an expected 4x surge in AI semiconductor revenue within 2 years. Tan expects adjusted earnings per share to exceed 30 dollars by fiscal 2028.
The client base for custom silicon is expanding well beyond Google. Broadcom began volume shipments of Google latest TPU 8I processors this quarter and plans higher output in the coming quarter. Production is also speeding up for custom chips destined for Meta and Anthropic. Anthropic plans to deploy 5 gigawatts of compute capacity by 2027. OpenAI is preparing to deploy over 5 gigawatts across its Jalapeno processor and next generation computing projects by 2028.
Recent quarterly financial reports confirm the rapid pace of expansion. Broadcom posted record quarterly revenue of 29.59 billion dollars, representing an 86% jump year on year. Adjusted earnings per share reached 3.32 dollars, up 96% over the previous year. AI silicon sales reached 16.7 billion dollars alone, rising 221% to generate 56% of total revenue. Forward guidance calls for 34.8 billion dollars in revenue for the next operating quarter.
