Careful: Shortage fears can lead to over-ordering and create a real shortage. Unless people panic, the problem is unlikely to be more than a few weeks delay in an order. Tan's comment in the financial call ("We're also working on resolving a few potential supply constraints in this particular segment." Details below) is likely circulating in the industry, and this article might. The instinctive action is to panic and double order, which is a pattern we see in chips on a regular basis.
Broadcom is the largest supplier of chips for both DSL & cable. The comment surprised me because the primary foundry, TSMC, is missing sales targets and generally has capacity. I haven't seen any huge increase in demand for broadband chips. Broadband subscriber growth in Europe and the United States is modest. Liberty Global is just getting started on increasing their cable coverage. Deutsche Telekom is two years behind schedule on it's big vector expansion.
China added an unbelievable 50M fiber connections in 2015 and Hock says that trend is continuing.
China Mobile in March added over two million new fiber subs as they overbuild Telecom and Unicom across the country.
Meanwhile, China is adding 20M 4G customers monthly, including China Telecom's effort to move everyone from 3G to 4G. China Mobile reached 400M 4G subs in May.
Here are Hock's comments from the call:
We also saw strong demand for our broadband products from set-top box refreshes driven by the start of adoption of 4K video. Service providers continue to invest in broadband access infrastructure, including ongoing fiber-to-the-home build-outs in China, as well as DSL and cable modem build-out in Europe. As we look into the third quarter for wired segment, we expect the strong demand to sustain from the prior quarter, and project wired segment revenues to be up in the low single-digits sequentially. We're also working on resolving a few potential supply constraints in this particular segment.
Yes, there is supply constraint in certain areas, and that does extend out lead times somewhat, which we are working very hard to improve. Simply, because we believe the demand is real out there. And yes, it does extend to Q4, and we are starting to have visibility on bookings and backlog into Q4, as we sit here right now.
Broadcom is shipping G.fast chips to Alcatel and Huawei but deployments are just beginning.