Broadcom Q4 2022 Earnings Call Transcript

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Provided by Quartr
December 8, 2022

Key Takeaways

  • Record FY2022 performance: Consolidated revenue reached $33.2 B (+21% YoY), operating profit rose 28%, and free cash flow per share grew 25%.
  • Q4 & Q1 guidance: Q4 revenue was $8.9 B (+21%), with semiconductor up 26% to $7.1 B and software up 4% to $1.8 B; Q1 revenue is guided at $8.9 B (+16%), with semiconductor growth ~20% and software flat.
  • Robust semiconductor demand: Q4 saw networking revenue +30% ($2.5 B), storage connectivity +50% ($1.2 B), broadband +20% ($1.0 B), and wireless +13% ($2.1 B); Q1 segment growth expected to remain strong (networking +20%, storage >50%, broadband +30%).
  • Strong software renewals: Infrastructure software posted 117% renewal rates (128% in strategic accounts), ARR grew 4% to $5.4 B, and software revenue is backed by over 90% recurring subscriptions.
  • Capital returns: Management raised the quarterly dividend by 12% to $4.60 ($18.40 annual), plans to resume up to $13 B in share repurchases, and converted 50% of Q4 revenue into free cash flow.
AI Generated. May Contain Errors.
Earnings Conference Call
Broadcom Q4 2022
00:00 / 00:00

There are 15 speakers on the call.

Operator

Welcome to Broadcom Inc. 4th Quarter and 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 Yu, Head of Investor Relations of Broadcom Inc.

Speaker 1

Thank you, Sherry, and good afternoon, everyone. Joining me on today's call are Hock Tan, President and CEO Kirsten Spears, Chief Financial Officer and Charlie Kowas, President, Semiconductor Solutions Group. Broadcom distributed a press release and financial tables after the market closed describing our financial performance for the Q4 fiscal year 2022. If you did not receive a copy, you may obtain the information from the Investors section of Broadcom's website atbroadcom.com. This conference call is being webcast live and an audio replay of the call can be accessed for 1 year through the Investors section of Broadcom's website.

Speaker 1

During the prepared comments, Hock and Kiersten will be providing details of our Q4 fiscal year 2022 results, guidance for our Q1 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.

Speaker 1

GAAP reporting, Broad Telecom 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 results. I'll now turn the call over to Hock.

Speaker 2

Well, thank you, Gee, and thanks, everyone, for joining us today. Before I provide color on our Q4 results, let me put in perspective what we achieved in fiscal year 2022. For the year, I'm pleased to report that consolidated revenue hit a record of $33,200,000,000 Growing 21% year on year, yet another year of double digit organic growth. This growth was driven by our strong partnerships with customers and increased R and D investments, which enabled accelerated adoption of our next generation technologies. With our robust business model, We grew our fiscal 2022 operating profit by 28% year on year and our free cash flow per share by 25% year upon year.

Speaker 2

Now to discuss details of our fiscal Q4. In our fiscal Q4 'twenty two, Consolidated net revenue was a record $8,900,000,000 up 21% year on year. Semiconductor Solutions revenue increased 26% year on year to $7,100,000,000 And infrastructure software revenue grew 4% year on year to $1,800,000,000 In Q4, Our semiconductor business continued to perform well across hyperscale, service providers and enterprise. On top of this, wireless grew sequentially as we ramp up The new platform at our North American customer. In reporting these results, I'd like to emphasize, We demonstrate our continued discipline in shipping our strong backlog only as and when needed by our end customers.

Speaker 2

So in contrast To weak consumer electronics spending today and despite concerns of a global recession, we believe Overall infrastructure spending remains strong and we continue to experience Sustained demand in most of our end markets and this is what we continue to see in Q1. So let me expand on this. Starting with networking. Networking revenue was a record $2,500,000,000 And was up 30% year on year, representing 35% of our semiconductor revenue. We see strong growth from deployment of Tomahawk 4 for data center switching at hyperscale customers, And we see upgrades of edge and core routing networks with our next generation Jericho portfolio at cloud and Service Providers.

Speaker 2

And at multiple cloud customers, we continue to lead in delivering Custom solutions for compute offload accelerators and actually surpassed the $2,000,000,000 mark in revenues in fiscal 2022. Looking into Q1, we do expect networking revenue to be strong And grow about 20% year over year. Next, our storage connectivity revenue was a record $1,200,000,000 or 17% of semiconductor revenue and up 50% year on year. As we have mentioned in previous earnings call, we are benefiting here from substantial content increases as both cloud and enterprise customers adopt Our next generation Migrate and storage adapters. This trend will continue in Q1 And we expect server storage connectivity revenue to grow above 50% year on year.

Speaker 2

Moving on to broadband. Revenue of $1,000,000,000 grew 20% year on year and represented 15% of semiconductor revenue. Our broadband business is benefiting from ongoing multiyear deployments by North American and European service providers Of 10 gigabit PON and DOCSIS 3.1, we've embedded Wi Fi 6 and 6E. In Q1, we expect the secular drivers behind broadband to continue And our business to be strong at about 30% year on year growth. Moving on to wireless.

Speaker 2

Q4 revenue of $2,100,000,000 represented 29% of semiconductor revenue With the 13% year on year on year increase coming largely from higher content. And in Q1, we expect wireless revenue to be sequentially flat and up low single digits year on year. Finally, Q4 industrial resale of $234,000,000 grew 1% year over year As softness in China mostly offset the strength in North American and European Automotive. In Q1, we forecast industrial resales to continue the trend of low single digit percent growth year on year. And so in summary, Q4 Semiconductor Solutions revenue was up 26% year on year.

Speaker 2

And in Q1, we expect semiconductor revenue growth to sustain at approximately 20% year on year. Moving on to software. In Q4, infrastructure software revenue of $1,800,000,000 grew 4% year on year and represented 21% of total revenue. Core software revenue grew 5% Year on year, in spite of adverse ForEx impact, in dollar terms, Consolidated renewal rates average 117% over expiring contracts. And in our strategic accounts, we average 128%.

Speaker 2

Within our strategic accounts, annualized bookings of $357,000,000 included $101,000,000 of cross selling of our portfolio products to these customers. Over 90% of the renewal value represented recurring subscriptions and maintenance. Over the last 12 months, consolidated renewal rates averaged 120% Over expiring contracts. And in our strategic accounts, we average 135%. Because of this, our ARR, which is annual recurring revenue, the indicator of forward revenue At the end of Q4 was $5,400,000,000 which was up 4% from a year ago.

Speaker 2

And in Q1, we expect our Infrastructure Software segment revenue to be flat Year on year, reflecting core software revenue growth of mid single digit percent year over year, offset by a year on year decline in the Brocade Enterprise Sand Business. In summary, We're guiding consolidated Q1 revenue of $8,900,000,000 up 16% year on year. While we are fully booked for fiscal 2023, in this environment, We are not providing you guidance for the year. Before Kersten To tell you more about our financial performance for the quarter, let me provide a brief update on our pending acquisition of VMware. We are making progress with our various regulatory filings around the world, As we very much expect, having received merger clearance in Brazil, Canada and South Africa, We anticipate the timeline for the review process would be more extended in other key regions, especially given the size of this transaction.

Speaker 2

Having said that, we're still confident that this transaction will close and be completed in our fiscal 2023. The combination of Broadcom and VMware It's about enabling enterprises to accelerate innovation and expand choice by addressing their most complex technology challenges in this multi cloud era And we are confident that regulators will see this when they conclude their review. With that, Let me turn the call over to Kiersten.

Speaker 3

Thank you, Hock. Let me now provide additional detail on our financial performance. Revenue was $8,900,000,000 for the quarter, up 21% from

Speaker 4

a year

Speaker 3

ago. Gross margins were 75 percent of revenue in the quarter and up 10 basis points year on year. Operating expenses were $1,200,000,000 up 3% year on year driven by investment in R and D. Operating income for the quarter was $5,500,000,000 and was up 25% from a year ago. Operating margin was 62 percent of revenue, up approximately 240 basis points year on year.

Speaker 3

Adjusted EBITDA was $5,700,000,000 or 64 percent of revenue. This figure excludes 129,000,000 of depreciation. Now a review of the P and L for our 2 reportable segments. Revenue for our Semiconductor Solutions segment was $7,100,000,000 and represented 79% of total revenue in the quarter. This was up 26% year on year.

Speaker 3

Gross margins for our Semiconductor Solutions segment were approximately 71%, up 70 basis points year on year, driven by product mix and adoption of next generation products across our extensive product portfolio. Operating expenses were $825,000,000 in Q4, up 4% year on year. R and D was $731,000,000 in the quarter, up 4% year on year. Q4 Semiconductor operating margins were 59%. So while semiconductor revenue was up 26%, Operating profit grew 33% year on year.

Speaker 3

Moving to the P and L for Infrastructure Software segment. Revenue for Infrastructure Software was $1,800,000,000 up 4% year on year and represented 21% of revenue. Gross margins for Infrastructure Software were 91% in the quarter and operating expenses were $348,000,000 in the quarter, down 1% year over year. Infrastructure software operating margin was 72% in Q4 and operating profit grew 6%. Moving to cash flow.

Speaker 3

Free cash flow in the quarter was $4,500,000,000 representing 50% of revenue. We spent $122,000,000 on capital expenditures. Day sales outstanding were 30 days in the 4th quarter compared to 29 days in the 3rd quarter. We ended the 4th quarter with inventory of $1,900,000,000 up 5% from the end of the prior quarter because we expect the mix of revenue in Q1 to have a higher cost of materials. We ended the 4th quarter with $12,400,000,000 of cash and $39,500,000,000 of gross debt, of which $440,000,000 is short term.

Speaker 3

Based on current business trends and conditions, our guidance for the Q1 of Fiscal 2023 is for consolidated revenues of $8,900,000,000 and adjusted EBITDA of approximately 63% of projected revenue. In forecasting such operating profitability, we would like to point out that because of product Our non GAAP gross margin could be down roughly 100 basis points from Q4 And R and D spending could be up sequentially as we step up hiring of engineers for multiple critical projects. Let me recap our financial performance for fiscal year 2022. Our revenue hit a record $33,200,000,000 growing 21% year on year. Semiconductor Solutions revenue was $25,800,000,000 up 27 percent year over year.

Speaker 3

Infrastructure software revenue was $7,400,000,000 up 4% year on year. Gross margin for the year was 76%, up 110 basis points from a year ago. Operating expenses were $4,800,000,000 up 6% year on year. Fiscal 2022 operating income was $20,300,000,000 up 28% year over year and represented 61% of net revenue. Adjusted EBITDA was $21,000,000,000 up 27 percent year over year and represented 63% of net revenue.

Speaker 3

This figure excludes 5 $15,300,000,000 or 49 percent of fiscal 2022 revenue. Turning to capital allocation. For fiscal 2022, we spent $15,500,000,000 consisting of $7,000,000,000 in the form of cash dividends and $8,500,000,000 in repurchases and eliminations. We ended the year with $13,000,000,000 of authorized share repurchase programs remaining and expect to resume our repurchase of common stock as soon as we can under SEC rules. Excluding the potential impact of any share repurchases, In Q1, we expect the non GAAP diluted share count to be 435,000,000.

Speaker 3

Aligned with our ability to generate increased cash In the preceding year, we are announcing an increase in our quarterly common stock cash dividend in Q1 fiscal 2023 to $4.60 per share, an increase of 12% from the prior quarter. We intend to maintain this target quarterly dividend throughout fiscal 2023 subject to quarterly board approval. This implies our fiscal 2023 annual common stock dividend to be a record $18.40 per share. I would like to highlight that this represents the 12th consecutive increase in annual dividends since we initiated dividends in fiscal 2011. That concludes my prepared remarks.

Speaker 3

Operator, please open up the call for questions.

Operator

Thank And today's first question will come from C. J. Muse with Evercore ISI. Please go ahead.

Speaker 2

Yes, good afternoon. Thank you

Speaker 5

for taking the question. You talked about infrastructure holding up well across most segments. I guess, I was hoping you could speak more To why infrastructure to date has been so immune from the weakness we've seen elsewhere in semi. Specifically, can you speak to trends you're seeing Perhaps in hyperscale versus enterprise, any differences there? And also, can

Speaker 2

you speak to how you

Speaker 5

see these trends throughout all of fiscal 'twenty three? Thanks so much.

Speaker 2

All right. Great question. What we see now last quarter End this current quarter as we progress as hyperscale spending continues strong, Enterprise consumption continues strong and broadband deployment Across North America, Europe and even parts of Asia continues They are multiyear trend of growth simply because out of COVID-nineteen, That was a lot of investment. There was a lot of plans to invest and these are multiyear. So exactly as I said, all these areas Currently continue to be very much on track as we've seen it.

Speaker 2

And now Keep in mind, as I said in previous earnings call and I just reemphasize here today, again, It's just want to assure you, we don't believe we are shipping beyond true demand. We continue to scrub to basically judge orders, the backlog we have, And we also take pains to only ship to customers who can consume it pretty much within the same Quarter before we do it. And so as far as we can tell, based on what we see as a willingness of our customers To exempt and consume the products we ship, that's what we see right now. Asking me for the rest of 'twenty three, No. I tend to be more careful in being able to answer that.

Speaker 2

I don't know the answer to that is my opinion. I do not know whether the strength in acquisition and consumption of our products will Continue to sustain for the rest of 2023. What we do see is over the next several months, We see those orders still in place. We see customers willing to take the products. We have talking to Multiple, multiple CIOs among the largest enterprise customers we have out there.

Speaker 2

We have not seen them talk about a reduction in their IT spending. We have seen many say it will grow and others saying it will at least remain flat. So I guess I'm cautiously positive about trends looking forward.

Operator

Thank you. One moment for our next question. That will come from the line of Ross Seymore with Deutsche Bank. Please go ahead.

Speaker 6

Hi, everybody. Thanks for letting me ask a question.

Speaker 4

Hock, I want to follow

Speaker 6

on CJ's and maybe ask a similar question, But in a slightly different way, last quarter you talked about actively scrubbing your backlog and clearly that's helped to avoid some of the inventory pitfalls that some of your peers have seen. But have you noticed since last quarter's call a change in either the rate of your backlog growth, I think it was up about 7% sequentially last quarter, The composition of your backlog or how actively and aggressively you need to scrub it, any sort of changes in those forward looking metrics that would Alter your view on kind of the sustainability of demand, the duration of it, etcetera?

Speaker 2

It comes down very simply to we continue to scrub our backlog in a manner this quarter, Last quarter, no differently than we did it 6 months or a year ago. We haven't changed our focus On ensuring that we do not ship products to the wrong people who just put it on the shelves, That is still very much very, very intact in our view. Our backlog continues to be way up there. And you're right, Makes us change. As you can see, 1 quarter, you would be broadband growing 20% year on year And networking growing 30% year on year and the following quarter is broadband growing 30% year on year And networking growing 20%.

Speaker 2

And then the impacts not just from hyperscale, varying their purchases In for want of better word, seasonal manner, it's also the particular end markets it goes to. So there's a lot of our mix of backlog and products we ship in any particular quarter will vary And they all change, but doesn't change the fact that we have still a very, very strong backlog. And what we're shipping, which is most important in the current quarter, we believe is what we are reflecting as End demand for our products.

Speaker 6

Thank you.

Operator

One moment for our next question. That will come from the line of Stacy Rasgon with Bernstein.

Speaker 5

Great, guys. Thanks for taking my question. So Hock, I guess just to ask the question explicitly. Last quarter, I think you said your semiconductor backlog was $31,000,000,000 and your lead times We're still 50 weeks give or take. What are those numbers now?

Speaker 5

Like where is backlog and where are lead times?

Speaker 3

Stacy, this is Kirsten We're not going to guide the year. So we're not asking you

Speaker 5

to guide the year. I'm not asking you to guide

Speaker 3

the year. Right. We're fully booked for the year. So if I give you the backlog number, I'm effectively guiding you to the year. So we've chosen not to provide that data this time.

Speaker 5

Okay. I guess can you just tell me is it gone up flat or down?

Speaker 2

Our forecast for the year, if you want to call it forecast based, Our backlog is not our forecast. We'll continue the year for the year will continue to grow. Other than that, I'm not telling you what it is. We don't got it.

Speaker 5

Got it. But you think backlog will grow for the year is what you're saying?

Speaker 2

Our year forecast We'll

Speaker 5

grow. Got it. Thank you.

Operator

Thank you. One moment for our next question. That will come from the line of Harlan Sur with JPMorgan.

Speaker 7

Good afternoon. Thanks for taking my question. Hock, your server storage Business has been extremely strong, right, up 50% plus in fiscal 2022. And more importantly, That business continues to sustain based on the January quarter outlook. We typically tend to think about HPB controllers and preamps, but Your business is much more diverse than this.

Speaker 7

So can you just, first of all, walk us through like what percentage is mega rate, PCIe or what I call Overall storage connectivity versus your storage controller business, which is primarily HDD controller and preamps and Maybe what's driving the near term growth in the storage franchise when many of your storage competitors and customers are seeing major weakness in this segment?

Speaker 2

Well, that's an interesting question. Our server storage connectivity, And you're right, which includes nearline hard drives, which includes Some what you call on prem server storage connectivity, Host bus adapters included is broad. And I don't have The numbers on my mind exactly what it is. Just broad based, particularly From the Migrade business, as I said, a big part of the growth, the big dollar of the big percentage growth, as I indicated before, It's due to the fact that the newer generation of products are all subsystems, our boards. We're not just shipping chips.

Speaker 2

So that counts for a big part of the growth. Notwithstanding, unit growth is up, but not as much as the 50% we announced, obviously. It's a big part of 50% is content growth as we ship subsystems and boards versus chips. But even then you need growth and it's across the board and it's not everything that grows, but enough said that overall it grows.

Speaker 7

Thank you.

Operator

Thank you. One moment for our next question. That will come from the line of Timothy Arcuri with UBS.

Speaker 8

Thanks a lot. Hock, you keep on scrubbing demand and you're shipping to what you think is consumption. So I guess I take it To believe that there's still a gap between what you're shipping and what customers want in any given quarter, I guess we could call that delinquencies, some Others call that delinquencies. Obviously, you haven't changed your approach, but I would imagine that this delinquency or this gap between what you're shipping in a quarter And what your customers want, that's probably declining. So I guess the question is, can you quantify the gap and is the gap getting smaller?

Speaker 8

Thanks.

Speaker 2

That's an interesting question. And we don't really try to quantify it again. And a big part of it is, I don't want to get you guys overly excited, but customer you know backlog is Sometimes it's very often categorized or characterized under CRD or customer request dates. Our customer requested in this particular quarter, for instance, our last particular last quarter was Much, much higher than what we actually shipped. And it was the same way 6 months ago.

Speaker 2

Is it got better from 6 months ago? I can only guess. And in this forum is the last thing I want to do. But it's still a big amount of CRD's backlog in excess Of what we actually ship up.

Speaker 8

Got it. Okay. Thanks.

Operator

Thank you. One moment for our next question. That will come from the line of Vivek Arya with Bank of America.

Speaker 4

Thank you. I actually have 2 very quick clarifications. First, Hock, have you seen the impact or you expect to see any impact of China lockdowns in your wireless business in Q2? I There's nothing doesn't seem to be anything in Q1. I was just wondering if there's something we should be prepared for in Q2.

Speaker 4

And then on the gross margin, I thought I heard Gross margin goes down sequentially in your semiconductor business in Q1. Is that really all mix related or is there a like to like impact that we should keep in mind.

Speaker 2

Okay. Let's take your first question first and then go through your more interesting second question, Which is interesting. You guys connect a few dots here. On the first one, as you know, our wireless is 1 single customer And the COVID shutdown and all that does slow down inter quarter shipments, but nothing we don't see Q2 is too far away for me to really give you any sense and no accuracy of what it's like. But there's obviously movements between Q4 and Q1 as our numbers does kind of reflect, But which is why year on year is a pretty good measure.

Speaker 2

As you see there, Q4 year on year was Just 13%, I shouldn't say just was 13%, and Q1 was actually still 1% up, But there's obviously some movements in between. But and I'm sure that has something to do with COVID logistics impact on logistics chain of our largest customer, but I can't really tell in the bigger picture. Now switching and certainly on Q2, I'm no position to give you any indication. We don't have visibility. Now turning to the second part of your question on gross margin, it's all product mix.

Speaker 2

And it's all product mix because There are some depending on the particular products we ship, as I've said many times before, The margin, product margin, gross margin does vary simply because it's the nature of the Market conditions, the ecosystem that we have in each of those vertical in those markets, Those niche markets we participate in. But broadly, to give you a sense, perhaps that gives you more color, networking tends to have Some of the highest margins collectively of our products and much higher than broadband. And of course, wireless has the lowest. And you look at Q4 to Q1, the mix shifts Away from networking somewhat and more to broadband. And wireless still remains a big chunk of it, Even though it hasn't receded as a percent, so that's why we see that impact on the gross margin Nothing more than just the mix of products we ship and the natural gross margin of those products vary One from the other.

Speaker 2

And you can actually see it with the way our inventory grew to. As we as Kirsten reported, Our inventory ending Q4 grew about 5% from that ending Q3, the quarter before. And obviously, the Q4 inventory is positioned to ship in Q1. And you see that increase Even as our guidance on revenue remained pretty flat.

Speaker 4

Thank you, Hart. Very useful.

Operator

One moment for our next question. That will come from the line of Joseph Moore with Morgan Stanley.

Speaker 2

Great. Thank you. You talked about being booked for the whole year next year. How much visibility do you think that gives you really? And I guess what's your philosophy going to be if customers with non cancelable backlog Let's start with the first part.

Speaker 2

I mean, when we're booked, we're really booked. I mean, we got paper that says they have committed orders For us to ship. And as you know, our orders are non cash sellable orders. Customers know that We have the paper and when we say we are fully booked, it means we have the backlog sitting there. Now the second question you asked is a more interesting question.

Speaker 2

What if we all hit a massive recession, depression or recession Late next year, in the next 6 months, 9 months, and customers and things really collapse around our ears, what would we do? My answer is, I don't know, which is partly why we're not giving you annual guidance. We will React, if and when circumstances require us to do. But at this point, we have the orders.

Speaker 5

Great. Thank you.

Operator

And one moment for our next question. That will come from the line of William Stein with Truist.

Speaker 9

Great. Thanks for taking my question and congrats on the Good results and outlook. It seems that the capital allocation policy in terms of the outlook, Maybe the policy didn't change, but at least the tactics did. The payout ratio relative to free cash flow, You're setting that a little bit lower than 50% and you're resuming the buyback. And I'm hoping you can just discuss why these decisions were made.

Speaker 9

Does it reflect an indication or changing view about the timing of the VMware close? Or is it related to Concerns around macro or anything else? Thank you.

Speaker 3

Well, I would say that we are policy wise, we've always said we would pay out approximately 50 Percent of the preceding year's free cash flows. And in this economic environment that we're all seeing, we believe that a twelve And increase year over year is a robust dividend. And so, yes, we're quite happy with that.

Speaker 2

And don't forget, we're going to start buyback once the rules allow us to do that. And so that's another return of cash to shareholders and we fully intend to get that going as soon as we could.

Speaker 1

As soon as we can.

Speaker 3

And we still have $13,000,000,000 under that program.

Speaker 5

Thank you.

Operator

And one moment for our next question. And that will come from the line of Matt Ramsay with Cowen. Please go ahead.

Speaker 10

Yes. Thank you very much. Good afternoon. Hock, I think in some of the prepared script that you guys Disclosed that you're now sort of in the compute offload ASIC franchise. The fiscal year was $2,000,000,000 and I think that's maybe A third higher than it was last year.

Speaker 10

It looks like some of the you guys did an event on that business earlier in the year and things really jumped up in fiscal 2018 and then kind of Leveled off a bit in terms of revenue and this is a pretty big, I guess, acceleration in that compute offload business. Maybe you could talk a little bit about the trends And are you seeing a broadening of the customer base or maybe higher volumes per tape out as you go down the node stack? I'd just be It seems like hyperscale really wants custom silicon at this point. Thanks.

Speaker 2

Yes, you're right in that regard. We have Both programs from the hyperscalers on custom or semi custom silicon All largely collectively we call as offload compute. And they all have their do their own. So that's in one way, that's very positive and very opportunistic for our technologies to be deployed. On an ongoing basis, the tricky thing in all this is more will come on.

Speaker 2

The rate of REM is harder for us to predict. These are very lumpy programs, fairly large and lumpy, Which is why we can get to $2,000,000,000 and raise an increase of like you correctly say, a third from a year ago, But it's lumpy and the trend is very hard for me to chart out unless you ask for it over the next 5 years. And even then, if you look at it, 5, this become a question now, would these hyperscalers revert to merchant silicon Versus continuing to use customary 6 and that is another poses another issue for me to figure it out. But if you ask for me over the next year or 2 where it will go, I'll be honest and say I'm not positioned to give you really a good forecast.

Operator

And one moment for our next question. That will come from the line of Aaron Rakers with Wells Fargo.

Speaker 5

Yes. Thanks for taking the question. Hock, I wanted to go back to the prior comment you had made and I want to make sure I'm clear on it. I think possibly within the context of lead times, You talked about customers. I think it was giving you forecasts that were Notably longer.

Speaker 5

I just want to understand a little bit of the context behind that comment earlier. Any kind of appreciating that you're not giving backlog, any kind of Context around that lead time discussion would be helpful.

Speaker 2

We haven't In any major substantive way, change our lead times by any means, as I've said before, and we kind of Go along on that practice mode. And we have forecast, but we're really not talking about forecast either as it relates to the previous comment, I think I was referring to backlog and paper that we use. And as I said before, even on those paper We have with customer request dates for shipments. We scrub that date scrub each of those demand Before we ship it out in the current quarter or the preceding quarter depending on what it is. But we don't we have forecast, but obviously, we're not giving you any indication of our forecast At this point, simply because we are still grinding our way through the backlog.

Speaker 4

Okay. Thank you.

Operator

One moment for our next question. That will come from the line of Toshiya Hari with Goldman Sachs.

Speaker 11

Hi, thanks so much for taking the question. Hock, I was hoping you could talk a little bit about your business in China, not so much from a ship to perspective, but from an end consumption I know you don't have perfect visibility into what's being consumed at the end customer level, but if you can kind of talk about What you're seeing in terms of trends across enterprise, cloud and service providers that would be helpful. How significant of a headwind was China in fiscal 2022 and what are your expectations going forward and what are you hearing from your end customers? Thank you.

Speaker 2

Well, to answer your question directly is China has slowed down In terms of consumption of products across industrial, across even infrastructure, it has slowed down And we see that they're still not totally collapsed, but They have slowed down compared to what they were taking a year ago. But that's and we see that particularly in our Industrial business, Which as we I indicated in my prepared remarks, strength in Europe, strength in North America, especially in automotive, But weakness in China, which is a big part of our industrial business, slowed it down. But beyond that, in the IT side, Yes, we have seen a slowdown, but keep in mind, China represents just less than 10% of our total revenues today. So while it obviously has some level of offsetting effect, it's not sufficiently large To have that much impact on our overall growth trend for the entire company.

Speaker 11

And any signs of improvement going forward, Hock, on the IT side? Or is it too early to tell?

Speaker 2

I think it's too early at this point for me to make a call. It's there's a sense is some reopening, but If I make a call, good chance I could be wrong in a month's time when things might shut down again.

Speaker 11

Thank you.

Operator

One moment for our next question. That will come from the line of Christopher Rolland with Susquehanna.

Speaker 12

Thanks for the question and congrats on bucking the Brendan, Sami is here, Hock. So

Speaker 3

my question,

Speaker 12

it was kind of addressed on the last one, but wanted to talk about the divergence, Particularly between storage and maybe China Enterprise Networking. You had There's a lot your other competitor and call it core hard disk drive talked about a downturn in demand in storage, A large inventory build and something similar happening in China networking as well. And you guys have Seemingly such a big divergence there. And I was wondering if perhaps you had an explanation for some of that and why the difference?

Speaker 2

And the only explanation to an earlier question was our portfolio in server storage It's pretty broad based. Now with couple of areas that are fairly large, areas like rate, mega rate, Particularly pretty much. But there are more than mega rate we have, you're correct. And it's pretty broad based. And there are some puts and takes, obviously.

Speaker 2

But overall, we see what we tell you.

Speaker 11

Okay. Thank you.

Operator

Sure. One moment for our next question. That will come from the line of Edward Snyder with Charter Equity Research.

Speaker 13

Thanks a lot. Hark, I'd like to talk a little bit about your wireless business, which is more retail focused and probably be the first one to see any recessionary pressures if you hit them. I know your guide is really solid. 1st,

Speaker 14

could you give us

Speaker 13

some idea of your firm order book? I know you get a projection when the model year So what the total number would be for the year, but you don't get a firm order for that for some time. So just kind of what is what would you how would you characterize firm order book for that or orders Per se, it is a 30 day, 60 day. So, help to anticipate if you see a change, when would that be? And then maybe if you could touch on How we should think about overall content at your largest customer in the next year or so, because there's obviously increased competition In some of your core areas, and I was wondering if you're looking to shift more of your focus there into some of the mixed signal custom stuff And maybe wait for some of the RF.

Speaker 13

Thanks.

Speaker 2

Okay. Interesting question. Let me try and address that. First, I assume you imply when you say orders or forecast on shipment, we only guide Q1. So I can only give you Q1.

Speaker 2

And it's all we have it all on paper, orders. These are rail orders, non cancelable. So we're giving you numbers that we intend to ship that we think the customer needs as far as we can scrub and we have it These are committed orders. These are not forecast at all, especially when you talk about Q1, Which ends, by the way, end of January. We have orders beyond end of January as it is.

Speaker 2

So these are very committed orders. And In that by that same token, pretty committed revenue forecast. Just to make it clear, Vietnam. You're right. And by the way, we have pretty good visibility for From that particular customer too.

Speaker 2

Now beyond that, to the second part of your question, yes, we're very pleased with content increase That we have experienced, not every year necessary, as you know, but over a period of years, we always see this Content increase. And we're still very, very well positioned in our product line in those few product lines That I call it almost franchise in our North American customers. And this is Wi Fi Bluetooth. This is RF front end. And this is Touch screen controllers, high performance, mixed signal.

Speaker 2

And that's we can only and that's all we focus on because these are areas Where we are the best, we believe we are the best technology and delivering value to our customer, There's no reason to find something else where you're not the best and hope to gain share from someone else. I could apply the same to my competitors in their thinking.

Speaker 13

But you don't see the competitive landscape shifting And make things more difficult for you in that, especially in the RF section in the next coming year or so, you think your franchises are your franchises and you're not disagreeing?

Speaker 14

Hey, thanks for taking my question. Hock, you mentioned you're fully booked for 2023 and you've had a lot of questions on that one. So I apologize in advance for squeezing in. One last one. And I was wondering if you look at the year as you see it booked today, if you could tell us In this like booking dynamics, where do you see for the full year 2023 the most growth And the list growth, I know you can't give us like numbers and you don't want to guide, I completely accept that.

Speaker 14

But if you could give us like a kind of idea of Where things keep going very fast, where things are slowing down in your order dynamics over the full year?

Speaker 2

Infrastructure is still holding up very well as we have said In this call so far, we see we continue to see infrastructure and infrastructure by Looking at it comes from hyperscale, in building their data centers and components to their data centers, in Service providers like telcos, where we see our strength in broadband, access gateways and broadband. And I know people are finding hard to imagine, we're seeing it even in enterprise, where We do not that's why I made a comment earlier. We do not see Across the cross section of large enterprises, a reduction in their IT spending For 2023. We have not seen we have not come across too many enterprise customers, And I'm talking real end use customer end use enterprise customers who are seeing their IT budget drop below 22. For most that we have asked, it's either flat or even up As they all continue have the compelling need to keep modernizing their platform And workloads and digitizing their business model.

Speaker 2

And I think that is the only That was the only explanation given to me why there was no such clear reduction even as We all hear every day the likelihood possibility of a global recession.

Speaker 14

Thank you very much.

Speaker 2

Thank you.

Operator

Thank you. As there are no further questions in the queue at this time, I would now like to turn the call back over to Ji Yu for any closing remarks.

Speaker 1

Thank you, Sherry. Broadcom currently plans to report its earnings for the Q1 of fiscal 2023 after close of market on Thursday, March 2, 2023. A public webcast of Broadcom's earnings conference call will follow at 2 p. M. Pacific.

Speaker 1

That will conclude our earnings call today. Thank you all for joining. Sherry, you may end the call.

Operator

Thank you. Thank you all for participating. This concludes today's conference call. You may now disconnect.

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