Welcome to Broadcom Inc.’s First Quarter Fiscal Year 2022 Financial Results Conference Call. At this time, for opening remarks and introductions, I would like to turn the call over to Ji Yoo, Director of Investor Relations of Broadcom Inc.

Thank you, Sheri, and good afternoon, everyone. Joining me on today’s call are Hock Tan, President and CEO; Kirsten Spears, Chief Financial Officer; Tom Krause, President, Broadcom Software Group; and Charlie Kawwas, Chief Operating Officer. Broadcom also distributed a press release and financial tables after the market close describing our financial performance for the first quarter fiscal year 2022. If you did not receive a copy, you may obtain the information from the Investors section of Broadcom’s website at broadcom.com. This conference call is being webcast live, and a recording will be available via telephone playback for one week. It will also be archived in the Investors section of our website at broadcom.com. During the prepared comments, Hock and Kirsten will be providing details of our first quarter fiscal year 2022 results, guidance for our second quarter as well as commentary regarding the business environment. We’ll take questions after the end of our prepared comments. Please refer to our press release today and our recent filings with the SEC for information on the specific risk factors that could cause our actual results to differ materially from the forward-looking statements made on this call. In addition to U.S. GAAP reporting, Broadcom reports certain financial measures on a non-GAAP basis. A reconciliation between GAAP and non-GAAP measures is included in the tables attached to today’s press release. Comments made during today’s call will primarily refer to our non-GAAP financial results. I’ll now turn the call over to Hock.

Right. Thank you, Ji. Thank you, everyone, for joining us today. So in our fiscal Q1 2022, consolidated net revenue was a record $7.7 billion, up 16% year-on-year. Semiconductor solutions revenue grew 20% year-on-year to $5.9 billion and infrastructure software revenue grew 5% year-on-year to $1.8 billion. Now enterprise demand grew very robustly from the trough we saw in Q1 last year as the recovery in enterprise IT spending continued to accelerate. Meanwhile, hyper clouds are upgrading their data centers, and service providers, telcos continue to deploy next-generation fiber-to-the-home. As expected, against the peak of a year ago, wireless grew single digits, and our core software business remains very stable and steady. On the supply front, lead times remain extended and unchanged as inventory of our products in the channel and in our customers remains lean. Our semiconductor backlog at the close of Q1 continued to grow double digits from that of the prior quarter. Let me now provide more color by end markets, starting with networking. Networking revenue of $1.9 billion was up 33% year-on-year and represented 32% of our semiconductor revenue. This strong growth was driven by deployment at scale of Tomahawk 4 and compute off loan across several hyperscale customers, as they upgrade and scale out their data centers. In enterprises, campus switching upgrades continue to accelerate. Let me talk about routing in this space. Investments in 5G backhaul by telco operators worldwide continue to drive strong growth in our Qumran family of products. More than this, the opportunity in our routing silicon has expanded into hyperscale in a very significant way, moving Ethernet into the back-end network of large-scale AI/ML clusters. In particular, I’m referring to the Arista’s 7800 AI platform, which scales Ethernet to connect many tens of thousands of CPUs and GPUs in hyperscale. This platform is built on our Jericho router. Our devices provide the most cost-effective fabric for AI/ML scaler with an end-to-end congestion managed lossless network and highest efficiency load balancing across the links. Now in contrast to proprietary protocols such as InfiniBand used typically in high-performance computing, we see low-latency Ethernet as the way forward for large-scale AI/ML networks as a widely adopted open architecture. Our unique ability to network these complex AI workloads in hyperscale is extending our customized training and inference SoC footprint at several cloud guys. In Q2, we expect networking to continue to be strong across the board and revenue growth to be in excess of 30% year-over-year. Next, our server storage connectivity revenue was $801 million, and growth accelerated to 32% year-on-year, representing 14% of semiconductor revenue. This was driven in large part by the continuing recovery of enterprise IT spending, much of which was deployed towards upgrading compute service. And most of these compute service use either our MegaRAID or SAN for server storage connectivity. We are also benefiting from increased content as enterprises upgrade to next-generation storage connectivity solutions to support deployment of leading-edge service. Beyond enterprise, with proliferation of video content in social media, we see our cloud customers increasingly adopting Nearline hard disk drives as the primary storage of choice. And to manage this much arrays of hard disk drives, they deploy storage service and expanders, which utilize very much our next-generation storage connectivity, silicon and software, creating another driver for revenue growth. Interestingly, we are also a critical supply of preamplifiers and re-channels in Nearline hard disk drives, with our revenue growing at over 20% CAGR over the last five years. Our Nearline revenue represented over two-thirds of our hard drive business this quarter. With the adoption of next-generation technology here, we’re selling more bots than just silicon, resulting in much higher dollar content. This dynamic, coupled with continuing strong demand from both enterprise and hyperscale, is expected to accelerate Q2 server storage connectivity revenue to over 55% year-on-year. Now moving on to broadband. Revenue of $911 million grew 23% year-on-year and represented 16% of semiconductor revenue. This was driven largely by increased deployment of next-generation PON and DOCSIS, our cable modem, with high attach rates of Wi-Fi 6 and 6E in home gateways. Examples of this about, last quarter, Charter announced trials of DOCSIS 4.0 running at speeds of 8.5 gigabit downstream and 6 gigabit upstream, both in CPE and remote node. Comcast start the deployment of their Wi-Fi 6E DOCSIS 3.1 gateway, and AT&T announced a multi-gig PON service on their gateways. All of these are using Broadcom SoCs. We remain the market leader in delivering Wi-Fi 6 and 6E chips to leading phones as well as routers, enterprise access point and carrier gateways. Through the first quarter of 2022, we have cumulatively shipped over 1 billion Wi-Fi 6 and 6E radios in just around three years since our launch. Our OEM customers and carrier partners are now ramping Wi-Fi 6E, the current generation of Wi-Fi making use of the 6 gigahertz band, which has increasingly been made available for unlicensed access across the globe. And as we look ahead, we are the industry leader, heavily investing in Wi-Fi 7 as the strategic complement to 10G PON and cable modem – we see – both broadband. We see this as the next step in broadband development and deployment globally. In the U.S. alone, the pending infrastructure access to site $65 billion over the next five years to connect more homes to high-speed broadband. Across the world, the same is happening as next-generation wide broadband is seen as the better alternative to 5G for home connectivity. As far as Q2 is concerned, we expect our broadband business to continue to grow 20% year-on-year. Moving on to wireless. Q1 revenue of $2 billion represented 34% of semiconductor revenue. Demand from our North American customer for our products continued to be strong during the quarter, driving wireless revenue up 10% sequentially and up 4% year-on-year from the peak quarter in fiscal 2021. As expected in Q2, wireless revenue will be seasonally down, about mid-teens quarter-on-quarter, but will still be up mid-single digits from a year ago. Finally, industrial revenue of $243 million represented approximately 4% of Q1 semiconductor revenue. Q1 resales of $239 million grew 37% year-over-year driven by robust demand from electric vehicles, renewable energy, factory automation and health care. Reflecting such strong resales, our inventory in the channel remain around one month, and we expect resales to continue to be strong in Q2. Accordingly, in summary, Q1 semiconductor solution revenue was up 20% year-on-year. Q2, we expect semiconductor revenue to accelerate to 25% year-on-year. Turning to software. In Q1, infrastructure software revenue of $1.8 billion grew 5% year-on-year and represented 24% of total revenue. Core software revenue grew 6% year-on-year. In dollar terms, consolidated renewal rates averaged 121% over expiring contracts, while in our strategic accounts, we averaged 136%. Within this strategic account, $656 million represented renewals on expiring contracts, of which $164 million represented cross-selling, including PLAs, of our portfolio products to the same customers. Over 90% of the renewal value represented recurring subscription and maintenance. Okay. ARR, annual recurring revenue, at the end of Q1 was $5.3 billion, which was up 5% from a year ago. In Q2, we expect our infrastructure software revenue to sustain around mid-single-digit percentage growth year-upon-year. In summary, in Q1, semiconductor revenue grew a strong 20%. In fact, excluding wireless, it grew – actually grew over 30%. Combined with our stable software business, consolidated revenue grew 16% year-on-year to $7.7 billion. Now turning to Q2 guidance. We expect semiconductor revenue growth will accelerate to 25% year-upon-year. And excluding wireless, it will be 35% year-on-year. Layering on our stable software business, we expect Q2 consolidated revenue growth of 20% year-on-year to $7.9 billion. And before I turn this call over to Kirsten, I just want to add, Broadcom recently published its second annual ESG report available on the company’s corporate citizenship site, which discusses the company’s ESG initiatives. As a global technology leader, we recognized the company’s responsibility to have a positive impact on our communities through our product and technology innovation and operational excellence, we remain very committed to this mission. With that, let me turn the call over to Kirsten.

Thank you, Hock. Let me now provide additional detail on our financial performance. Revenue was $7.7 billion for the quarter, up 16% from a year ago. Gross margins were 76% of revenue in the quarter and up 227 basis points year-on-year. Operating expenses were $1.2 billion, up 6% year-on-year, driven by investment in research and development. Operating income for the quarter was $4.7 billion and was up 23% from a year ago. Operating margin was 60% of revenue, up approximately 362 basis points year-on-year. Adjusted EBITDA was $4.8 billion or 62.5% of revenue. Note that this figure excludes $136 million of depreciation. Now a review of the P& L for our two segments. Revenue for our semiconductor solutions segment was $5.9 billion and represented 76% of total revenue in the quarter. This was up 20% year-on-year. Gross margins for our semiconductor solutions segment were approximately 71%, up 347 basis points year-on-year, driven by favorable product mix and content growth in next-generation products across our extensive product portfolio. Operating expenses were $817 million in Q1, up 9% year-on-year. R&D was $725 million in the quarter, up 10% year-on-year. Q1 semiconductor operating margins increased to 57%. So while semiconductor revenue was up 20%, operating profit grew 31%. Moving to the P&L for our infrastructure software segment. Revenue for infrastructure software was $1.8 billion and represented 24% of revenue. This was up 5% year-on-year. Gross margins for infrastructure software were 90% in the quarter, up 71 basis points year-over-year. Operating expenses were $348 million in the quarter, up 1% year-over-year. Infrastructure software operating margin was 71% in Q1, and operating profit grew 7%. Moving to cash flow. Free cash flow in the quarter was $3.4 billion, representing 44% of revenue. We spent $101 million on capital expenditures. Days sales outstanding were 30 days in the first quarter compared to 35 days a year ago. We ended the first quarter with inventory of $1.5 billion, up 17% from the end of the prior quarter, in large part due to higher material costs. Our hardware backlog at the end of the quarter was over $25 billion compared to $22 billion the preceding quarter. And our lead times remain steady at 50 weeks. Our software backlog continued to grow as well and ended the quarter at over $15 billion. As a point of reference, software backlog was $13 billion a year ago. We ended the quarter with $10.2 billion of cash and $39.5 billion of gross debt, of which $300 million is short term. Turning to capital allocation. In the quarter, we paid stockholders $1.8 billion of cash dividends. Consistent with our commitment to return excess cash to shareholders, we repurchased $2.7 billion in common stock and eliminated $375 million of common stock for taxes due on vesting of employee equity, resulting in the elimination of approximately 5 million AVGO shares. The non-GAAP diluted share count in Q1 was $446 million. Based on current business trends and conditions, our guidance for the second quarter of fiscal 2022 is for consolidated revenues of $7.9 billion and adjusted EBITDA of approximately 62.5% of projected revenue. Note that we expect Q2 non-GAAP diluted share count to be 442 million. This excludes the potential impact of any share repurchases completed in the second quarter. That concludes my prepared remarks. Operator, please open up the call for questions.

Thank you. [Operator Instructions] Our first question will come from Harlan Sur with JPMorgan. Please go ahead.

Good afternoon, and congratulations on the strong results and execution. Hock, given your backlog and extended lead times, you’ve got pretty good visibility into this year. Your end markets are strong, right? Cloud and hyperscale CapEx spending is looking to grow about 30%. You’re driving the 200 and 400 gig networking upgrade cycle. Enterprise spending is still expanding. As you mentioned, Broadcom continues strong, whether it’s DOCSIS, Wi-Fi, fiber upgrades. And then on your compute acceleration ASIC pipeline, you’ve got Google, Facebook, Microsoft, all of these guys ramping. So it seems like the demand, your product leadership, seasonality can sustain a sort of low to mid-20% plus type year-over-year revenue growth profile through this year. So I guess the question for you is, do you have line of sight and confidence on sustaining this type of growth through the year? And then more importantly, do you have the supply commitments to support this type of growth?

I’m not providing annual guidance, Harlan, if that’s what you’re angling for. But what you’re saying makes a lot of sense. And to answer your question directly, yes, we have line of sight through end of 2022, both, we believe, in demand and in supply.

Thanks, Hock. Sure.

Thank you. Our next question will come from Vivek Arya with Bank of America. Please go ahead.

Thank you for taking my question. Hock, I was hoping if you could just revisit what’s driving the acceleration in growth. And then the more important question is that there is a perception that semiconductor companies are benefiting abnormally because of a pricing lever because of the tight supply conditions. And as the foundry capacity eases, that your costs will go down and the pricing advantage will disappear. And I was hoping you could give us some more color, how much of a role is pricing playing in the expected sales growth this year on a like-to-like basis versus what you saw last year?

That’s a very good question. And I mean, and true, the rail demand that we’re seeing underlying – if you talk about underlying trend that is sustainable, at least in this typical upcycle, you’re right, it’s – while we’re showing 30% in networking, in server storage, a part of it is driven by ASP increases simply because we are passing on our material cost increases, wafer, substrates, assembly to our customers, inevitably. But it’s much less than you probably think it is. What is really sustainable is what Harlan said in the previous question. We think the trend demand increase is more like closer to 20% year-on-year than what perhaps in dollar terms you’re represented. And how long would it last? Who knows? It’s hard for me to figure out, because I’ve been wrong so many times, and this is now going on into the almost – 2022 is done and is strong. We’re now booking, given our lead times I indicated, in 2023. And 2023, I think, will be – at least the first half of 2023 will still be pretty close to the same. And it’s the latter part of 2023 and 2024 that we have to figure out whether there’s enough supply that will start coming in to basically address what is today and what we’re seeing, an extremely strong demand environment, whether it’s from enterprise, telcos and service providers and hyperscale, all three are strong.

Got it. So price stickiness perhaps can continue into 2023. I just wanted to clarify that.

At least the first part of 2023, yes.

Thank you, Hock.

Thank you. Our next question will come from Stacy Rasgon with Bernstein Research. Please go ahead.

Hi, guys. Thanks for taking my questions. Hock, I wanted to ask about gross margins. So you did like 75.5% in the quarter, 71% for semis. And if I sort of like squint at your guidance, it implies gross margins into Q2 at least at that level, if not even probably higher. And this is amid cost increases and everything else. So I mean how do we think about like the limited – I know you always talked about margins kind of going up 100 basis points a year, and they seem to be doing even better than that. Do we just keep modeling them going up from here? Or do you think they take a pause? Are there are any other drivers like into the back of this year mix or anything else that would sit on that? Just how do we think about it just given the levels that they’re sitting at right now?

Well, I could tread on my usual statement because it happens to be true, which is year-upon-year under normal situations, yes, we see this 100 – around 100 basis points expansion of gross margin on our semiconductor front. You get that. Now Kirsten just indicated, we did better than that in semiconductor. And I guess the – and the reason why we did better than that this season, so to speak, if you come back to my remarks, there’s a lot of deployment – launch and deployment of new generation products that I mentioned. We’re talking about in networking, Tomahawk 4, and much more, Trident 4, which is more towards some data centers that use in enterprises, come out for use in hyper cloud, that new generation. Then we talk about Jericho being deployed – the latest Jericho being deployed in the bank site networks of machine learning, AI, GPU in the connectivity. That’s a whole new application. Then we talk - in service storage, I’ve talked about a whole slew of new generation solutions, which we put in place towards, basically, for new generation, leading-edge servers out there from the guys who do those servers. And with those new generation, we get that better margin. So in all, I guess the additional input I put in is a lot more new generation products coming out now, happen to be in 2022 – we’re seeing happen. And of course, we are, in this environment, thankfully, able to pass on our cost increases to supply – to customers. And that all adds up to a fairly decent gross margin set of results. But do not let that be an indicator, please, that it is something that will be a 200, 300 basis points expansion year-on-year. We still believe normal situation is still be just on average, 100 basis point expansion.

Got it. But as long as you can keep the new products coming, we should still be able to see that 100 basis points even from here?

Yes. And by the way, it’s not just me having to come on new products. There’s a pool. The customers, the applications of our markets require us – and that’s the beautiful thing about the semiconductors and technology, is always – there always is a need for next-generation better products. Whether it’s performance power, whatever, is always, there’s a pool. And that product life cycle is what enables us to develop these new products, and our margins will keep expanding.

Got it. That’s helpful. Thank you so much.

Thank you. Our next question will come from Ross Seymore with Deutsche Bank. Please go ahead.

Hi, thanks for let me ask a question. Hock, thanks for the information on the backlog for the semi business. It’s good to see that rising as much as it did sequentially, especially considering the lead times stayed flat. While the magnitude is impressive, I really want to ask about the profile of that and how it may or may not be changing. So as that additional backlog comes in, given all the moving parts between enterprise and cloud and broadband and wireless, et cetera, any sort of changes in the profile of that backlog that you find to be interesting, either in a positive or negative sense that will give us a clue about the future growth drivers for your company?

That’s a good question. And I employed in some of my point – some of my remarks, but let me take you directly. Yes, enterprise, enterprise demand, spending is the strongest driver that we’re seeing today. And it should be no surprise, because something we have said since last quarter and the quarter before, enterprise has recovered more – than recovered – is going – it’s on fire, is the best way to describe it. Enterprise spending on IT is, as we perceive it, on fire. And we are seeing a big part of that. And that’s not to say that hyper cloud and telcos are not adding to it, but not as strong as enterprise recovery.

Any negative surprises in that? You talked about the positive side. Is there anything that’s been surprising on the negative side?

No. Not really. It’s just – that’s – I think there’s a lot of pent-up spending. There’s a lot of need for a lot of enterprises to upgrade. And that’s also what’s driving, as I indicated in my remarks, a lot of on-prem campus switching investment going in. I mean look at even Broadcom. We’ve been using Wi-Fi in our hot spots, in our excess gateways, in – through the campus. A key part of it is wireless connectivity, Wi-Fi, so to speak way. I mean we’ve been running Wi-Fi 5 for many years. Now is the time to move to Wi-Fi 6, 6E. And we’re not the only one we’re seeing across the board, very strong demand from lots of enterprises wanting to upgrade connectivity as offices start to slowly open up.

Thank you.

Thank you. Our next question will come from John Pitzer with Credit Suisse. Please go ahead.

Yes, guys. Thanks for let me ask the question. Hock, usually at this point in the cycle with lead times extended as much as they are and you guys getting pricing power, the big concern on Wall Street is to what extent is the demand you’re seeing real demand versus perhaps your customers building inventory. And I know you’re less consumer focused than most. And so maybe inventory builds are less relevant in some of these infrastructure markets. But I’m wondering if you could give us your perspective on – or at least what you guys try to do to scrub the backlog to make sure it’s good demand. And if you think it’s good demand, I’m kind of curious, you’ve always had a very realistic view of what the long-term growth rate for your semi should be – semi business should be. Is that beginning to change? And like many of your peers who have put up a higher kind of new CAGR, are you willing to go there right now?

Let’s answer the first question first, and let me go to the last one and the best at the end. But on the first part, yes, as I’ve stated in previous earnings calls, I’m more than happy to reiterate it here, which is we are very, very concerned, obviously, that you could – we could easily build up inventory in various parts of our demand environment, just because we ship according to what customer sending in orders as their customer requested. So we don’t – we actually spend a huge amount of bandwidth of our operations and salespeople in this environment to make sure we get products to any particular customer just when they need it. Not any earlier and hopefully not too late either because we like to address customer a real need in that regard. But what’s very, very important to us is not to ship excessively. And inventory, whether it’s in the customer inventory, in distribution, the nice thing about our business in semiconductor is this, 75% of our revenue comes from just about 100 customers, and they’re direct. The last 25% go through distribution. 75% direct to 100 customers. We have enough salespeople. We have enough visibility on these customers to know exactly pretty closely, we’d like to think, what they need and ship to what exactly they need. And when we do all that, I said it before in last earnings call, true in demand growth – true growth as we have been seeing in 2021, it was about 20% year-on-year improvement. Now we now take on the fact that material costs have gone up in 2022. So there’s an addition beyond 20%. I still believe it’s about 20% in response to earlier in this environment because the last up cycle we saw in 2017, it was 20% year-on-year improvement. It wasn’t stronger than that. And by the way, we sell mostly those big core system on a chip into any platform that our customer builds and sells. We do – and generally, we get very good visibility. If we were to sell more of the peripheral chips, the secondary chips, that adds up to the total platform, and that cause a fraction of what our system on a chip cost. Then perhaps you will not have that visibility, and we believe there are a lot of pockets of those inventory in the wrong places because of unbalanced chipsets sitting out there. But if you – for example, if you’re building a data center and you need 1,000 Tomahawk 4s, believe me, you will not buy more than 1,050 Tomahawk 4s. But if you buying voltage regulator, you probably buy 2,000, 3,000 of those voltage regulators just in case. And that’s the difference in what we’re seeing. So we think we get a good sense of what’s out there. And the kicker here is the price increase that was passed on because of wafer cost and substrate cost increases, which makes it go over perhaps what we think is a sustainable level. Now to answer your longer-term question, no, I don’t think on a long-term, say, next 10 years, would the CAGR change, I think people will say that CAGR change, frankly, are probably dreaming because there’s no evidence on our side to show why this industry, which is relatively mature semiconductor industry, should suddenly spiral into a different trend growth rate. We have seen in the last 10 years, compounded roughly 5% annual growth rate. And there’s nothing to indicate, frankly, why you would not be that way for the next long-term, 10 years. Now it won’t be 5% every year, obviously, we’re not at 5% this year. But on the long-term, I still think that trend has not changed.

Perfect. Thank you very much.

Sure.

Thank you. Our next question will come from Toshiya Hari with Goldman Sachs. Please go ahead.

Great. Thank you so much for taking the question. Hock, I wanted to ask for your thoughts on capital allocation. It’s been a while since your last meaningful acquisition. A lot of things are going on from a macro perspective. Rates are going up. And obviously, the economy is a little bit squishy. You just spent $2.7 billion on buybacks. Just curious how you’re thinking about allocation of capital. Any changes to how you think about M&A and your appetite for M&A going forward? Thank you so much.

Thank you. Well, really, in last quarter, we are very clear about our capital allocation plan, at least for 2022, and which is, frankly, at – we’re still looking for acquisitions. We’ve just been very, very – as we usually do, being very thoughtful and selective about the assets we would acquire. But very much so, we’re still in the market to look for good – great assets to acquire, and we have the capacity to handle it. And in the meantime, given two years, 2020 and 2022 when we haven’t done anything on acquisitions and have been earning and generating lots of cash, we have taken on – other than paying dividends and maintaining the policy on dividends that we have outlined for the long-term, we have decided for fiscal 2022 – for actually calendar 2022 to put out that buyback program of $10 billion. We spent $2.7 billion of it so far, and we have probably most of the year to go. And we’ll probably use – we will likely use all of it up evenly over the next nine months of the remaining year. And that nothing has changed. But – and we believe we still have the capacity to do a good-sized acquisition.

Thank you so much.

Thank you. Our next question will come from Pierre Ferragu with New Street Research. Please go ahead.

Hi, thank you for taking my question. I’d love to hear whatever debt you can give us, Hock, on your I think ASIC business in semiconductors. And what I’m wondering is how is business trending compared to your other segments in semiconductors. And do you see your ASICs taking share overall with your hyperscale clients? Or is that just growing in line with the rest of the market or actually below the rest of the market?

Okay. Let me paraphrase my – your question the way I would probably be able to answer it and see if it’s the right thing. What you’re saying is, see, we have a product division that does ASIC custom chips essentially for usually large customers. And that’s a good-sized business for us. And a big part of that business to address what you’re saying here, is address has been used is now currently, though not in the past, but more recently in the last few years, it was the hyperscale players who are starting to develop – wanting to develop their customized and dedicated accelerators for specific functions and workloads mostly related to, for instance, machine learning, AI, also to do with video transcoding and also gradually increasing virtualization and orchestration of data centers. All those have customized silicon accelerators to enable these hyper cloud guys to run their workloads better and more effectively. I believe that was your question. And the best way to answer your question is year-on-year this quarter, Q1, we grew revenue in this offload computing sector, which all ASIC north of 50% revenue year-upon-year. All right? I hope that answers your question.

Yes. Thank you. That’s perfect. Thank you so much.

Thank you. Our next question will come from Tim Arcuri with UBS. Please go ahead.

Hi, thanks a lot. Hock, I had a question on your wireless business. It’s been very strong, but you’ve been recently talking about some trade-offs that one of your customers making is – making on the FBAR side, and maybe making it a little even more concentrated on a single customer. And I know that you consider selling this business some time back, but does even – your further revenue concentration, does it make you rethink maybe how committed you want to be to that segment? And maybe whether you could redeploy this capital into another market, especially as things might be changing on the modem side. Thank you.

Okay. Good question. And my answer would be very simple and direct. We have always indicated our wireless business is one customer largely, our North American OEM. And you know what, they’re a very good customer. They’re very strategic. And we are not only selling one product but selling multiple products, which are very strategic to us and I believe also very important and strategic to them, which will – which is what makes a partnership very sustaining. I see this as a very long-term sustaining partnership in the sense of the products we do develop we collectively call wireless because it goes into mobile – a lot of mobile devices, though not entirely, but most of it goes into phones. It goes into wearables. It goes into pads or tablets. And it goes into not so mobile, but many of them are into even notebooks. It goes into all the stuff, and we sell – we develop and provide something like about five different critical engine technology products to this same customer. So it is – it has over 10 years now developed into an extremely sustainable and strategic relationship. Clearly, from our side, yes. I’d like to believe from their side, the same thing.

Thanks, Hock.

Thank you. Our next question will come from Edward Snyder with Charter Equity Research. Please go ahead.

Thank you. Well, since we are talking about wireless, I wanted to follow-up with that. Thanks for your answer, Hock, but I want to step back and maybe look at the longer-term on this. You – when you bought Brocade, it kind of shifted the narrative from we don’t really need revenue growth. We’re mostly looking for cash flow and high margins, which worked out very well. In wireless, you get a little bit different animal with Samsung on the way out because they shifted their phone strategy to more cost-centric and less performance-wise. It made sense for Broadcom to participate there. And your large customer is doing fine. It looks like they will be for years. But as we’ve already seen on the high end, 5G, the growth in revenue – growth in content is slowing. And by all measures, it will likely stagnate in the next three years to four years. In that kind of environment, and especially if you’re not doing the custom designs anymore, given – it’s just given the revenue may not grow, if margins are affected, what do you do with it? I mean you’ve not ever embraced the business where both revenues flat to down and margins are in decline. I think the question a lot of folks have is, what could you possibly do? It’s so large, and there are so few suitors for it. It’s kind of puzzling in three years or four years what the strategy be with wireless. Maybe you could help shed a light on that. Thanks.

That’s an interesting thing, Ed. Here, all our businesses – I just want to remind you, in our view, as I said, in the view of all semiconductor segments itself, it’s not a high-growth business. You guys like to think because probably there are a few companies out there who are trying to grow in a business that doesn’t grow. 5% is what it is. And so it’s a business that does grow, but in dollar terms, overall, mid-single digits. I call it a slow growth industry. Within it, however, it still evolves new generation of products constantly. That’s the unusual unique thing about semiconductors. It keeps evolving. Not disruptive much as people like to say they are disruptive. My view is evolutionary, but that evolutionary creates new opportunities for basically selling a better product, a more valuable product to the same customer for the similar application, and it go – which the customer can then monetize back on their own. And that’s really all it is. And what we are doing here in wireless is no different. And there is something also very interesting. Every product we sell in wireless is, in fact, a non-standard product. It is customized. It is customized for the needs – for the unique needs and particular requirements of that particular customer. That’s what makes us so successful, and that’s what makes the partnership so sustainable. We developed technology in the form of products that we do, whether it’s an RF, with FBAR, front-end module or whether it’s pure silicon with some SDK – a lot of SDK software where some unique high performance mixed signal, analog product, all of which we do to this customer, we do it to meet their particular requirements, which allow their products to be at a level that’s very differentiated from their own space – in the competitive space they are in. And that’s what makes it very unique, and that’s what makes this thing keep going. But we’re not looking for in any end market we are in, in any product line we are in, for high growth. High growth in semiconductor comes in spurts and do not last. If anybody tells you otherwise, please don’t believe it because it has never happened.

Thank you.

Thank you. We do have time for one final question from Vijay Rakesh with Mizuho. Please go ahead.

Yes. Hey, Hock, just a question on the networking side. Obviously, very strong growth, up 33% with the Tomahawk and DPU, I guess. What do you see the long-term growth there, meaning if you look at the next 12 months to 24 months on the networking side? I had a follow-up. Thanks.

Okay. The next 12 months is pretty good. We have visibility, and we kind of indicated that in our answers. 24 months, harder for me to tell you. If you ask me what do you think over the next 10 years, I’ll tell you what it is, mid to high-single digits. And because that’s – it’s consistent. There is no segment – don’t believe anybody telling otherwise, that will have a sustainable growth rate in this space. It’s share changes maybe. So but next 12 months, very good growth rate is what I indicated.

Thanks. And one last question on the software side, obviously, since December 8 when you announced the big buyback, obviously, software valuations have become much more attractive in the last might be down 30%, 40% there. But do you have a target in mind as to what you think that software business should be, like 24%, 25% of revenues now? Are you looking to build it up to half of your business? Or is there a long-term target that you’re putting out there? Thanks.

To tell you, I don’t have a strategic plan here. My plan are a numbers plan. It’s – our strategy in acquisitions and growing this entire Broadcom platform is more about locating, identifying very, very strong assets out there and – which are actionable, and then making a deal and buying them and integrating in our platform. They got to meet our requirements of quality of the assets of the product – of the business model, to some extent, the product characteristics being very mission-critical. And then after that comes the price. For us, after that is the price. Because you’ll recall, the way we run those software businesses tends to be different usually from the way the party we buy from Transit. And because of that, we are able to create the financial returns consistent with a business model that we put in place fairly different from what the existing business model is in most software companies out there. All right?

Great. Thanks, Hock.

Ladies and gentlemen, thank you for participating in today’s question-and-answer session. I would now like to turn the call back over to Ji Yoo, Director of Investor Relations, for any closing remarks.

Thank you, Sheri. In closing, similar to our networking, broadband and storage teach-ins in fiscal 2021, Broadcom and Deutsche Bank will be hosting a teach-in of our custom silicon business on Tuesday, April 19, at 12:00 p.m. Eastern, 9:00 a.m. Pacific. Hock will be joined by Frank Ostojic, General Manager of our ASIC Products Division; and Vijay Janapaty, General Manager of our Physical Layer Products Division. Broadcom currently plans to report its earnings for the second quarter of fiscal 2022 after close of market on Thursday, June 2, 2022. A public webcast of Broadcom’s earnings conference call will follow at 2:00 p.m. Pacific. That will conclude our earnings call today. Thank you all for joining. Sheri, you may end the call.

Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.