Silicon photonics won’t matter ‘anytime soon’ says Broadcom CEO
Silicon photonics won’t matter in the datacenter “anytime soon,” according to Broadcom CEO Hock Tan.
On the company’s Q4 2025 earnings call on Thursday, a financial analyst asked Tan if Broadcom feels customers are ready to adopt the technology, which improves network speeds and performance by bringing optical communication deeper into computing infrastructure. Operators of AI infrastructure need fast networks to carry the massive quantities of data they process, meaning interest in technologies that speed things up is high.
“I can see a point in time in the future when it matters as the only way to do it,” Tan responded, before saying, “We are not quite there yet.”
Indeed, the CEO thinks two waves of innovation need to play out before silicon photonics becomes necessary. The first is scaling copper-based interconnects for rack-scale systems. The second is pluggable optics – a technology that combines electronic and photonic devices.
“The final, final, straw is when you can’t do it well in pluggable optics,” Tan said. “Then you go to silicon photonics.”
The CEO said the shift to silicon photonics is inevitable but distant. “It will happen and we are ready for it, but not anytime soon,” he said, adding that Broadcom’s already doing the R&D needed so it is ready to satisfy demand.
For now, Broadcom is busy building AI hardware to deliver on its $73 billion backlog of orders. More than $50 billion of that is for custom AI accelerators – which Broadcom calls “XPUs” – ordered by hyperscale customers. Tan said those buyers see value in custom chips because they allow them to encapsulate software functions into silicon, which simplifies their stacks.
“To invest in custom accelerators is a multi-year journey and not transactional or short-term decision,” he told investors, to demonstrate that Broadcom’s XPU wins represent both sticky customers and an expression of belief that demand for AI hardware will persist.
“Customer cooling [of demand for AI hardware] is an overblown hypothesis which I do not think will happen,” he said, pointing to a billion-dollar order for XPUs from an unnamed new customer, and an additional $11 billion order from Anthropic to back his assertion.
“We have never seen bookings like we have seen in the last three months,” Tan told investors, and predicted the company’s backlog of orders could grow. The CEO shrugged off suggestions about supply chain constraints, saying Broadcom can get the capacity it needs from TSMC, dodging a question about RAM costs, and pointing to a new plant in Singapore as giving it the packaging and assembly capacity it needs to satisfy demand.
Q4 revenue from semiconductors reached $11 billion, up 35 percent year-over-year. $6.7 billion of that revenue came from AI products, and Broadcom’s AI hardware revenue has increased 10x in under three years.
The company’s infrastructure software business won $6.9 billion of revenue, up 19 percent year-over-year. Tan said most of that improvement came from sales of VMware software, which he said will drive low-double-digit growth through 2026. That’s a slowdown from the 26 percent year-over-year growth recorded in FY 2025. Software margins, however, rose six points to 78 percent, reflecting the completion of efforts to integrate VMware into Broadcom.
Tan predicted Broadcom’s semiconductor business will keep the company growing fast, offering Q1 FY 2026 guidance of $19.1 billion in revenue, a 28 percent jump.
Broadcom’s share price jumped around three percent from its closing price immediately after its results announcement, but then quickly dipped five percent lower. ®
