Broadcom Pursues Up to $100 Billion Debt Financing for AI Chip Deal with Anthropic

Broadcom seeks more than $60 billion in latest AI debt deal, Bloomberg News reports

Aug 20 (Reuters) - Broadcom (AVGO.O), opens new tab is in talks with a group of lenders to raise more than $60 billion in debt for an AI chip financing deal that will benefit Anthropic and other companies, Bloomberg News reported on Thursday, citing people familiar with the ⁠matter. The financing could include a roughly $30 billion junior debt tranche, and Broadcom would guarantee part of the senior-secured tranche possibly ranging from about $60 billion to $70 billion, the report said. The numbers under discussion would potentially bring the total raise ⁠to as much as $100 billion, according to the report. Blackstone (BX.N), opens new tab and Apollo Global Management (APO.N), opens new tab are in talks with Broadcom to participate ⁠in the financing, following a partnership the three companies struck in June, the report ⁠added. Broadcom, Apollo and Blackstone did not immediately respond to Reuters' requests ⁠for comment on the Bloomberg report. Reporting by Anzar Mehraj in Bengaluru; Editing by Leroy Leo and Diti Pujara Our Standards: The Thomson Reuters Trust Principles., opens new tab

Broadcom reportedly seeking up to $100B in debt financing for AI chip deal

Broadcom reportedly seeking up to $100B in debt financing for AI chip deal Broadcom Inc. is reportedly seeking to borrow up to $100 billion as part of a new artificial intelligence chip financing deal. Bloomberg today cited sources as saying that the debt is intended to support the growth efforts of Anthropic PBC and unnamed "other companies." Those companies may include OpenAI Group PBC. Earlier this year, the ChatGPT developer partnered with Broadcom to develop custom processors. The chipmaker's debt financing deal could reportedly include between $60 billion and $70 billion worth of senior notes. Those are loans that the borrower must pay back before its other obligations in the event of a bankruptcy. It's believed that Broadcom may guarantee a portion of the debt. Additionally, the company could reportedly add about $30 billion worth of junior notes, debt instruments that are only repaid after the borrower offloads all its senior debt. It's unclear what AI initiatives Broadcom plans to support with its chip financing deal. However, today's report did specify that Blackstone and Apollo Global Management are among the investors from which the chipmaker hopes to raise the funds. In June, the three companies launched an investment vehicle called the AI XPV Platform. It has provided Anthropic with $35 billion in financing to support data center construction initiatives. Those projects are expected to bring more than 1 gigawatts of computing capacity online this year. According to Broadcom, the AI XPV Platform's longer-term goal is to facilitate more than 20 gigawatts worth of data projects through 2028. Notably, the infrastructure that the fund will finance will use Broadcom silicon. The company is a major supplier of chips for data center switches. It's also the world's top maker of host bus adapters, which are used to connect servers with storage equipment. AI accelerators have emerged as another major source of revenue for Broadcom. The chipmaker helped Google LLC develop its TPU line of machine learning processors. In April, the companies extended their engineering partnership to 2031. The same month, Google and Broadcom announced plans to provide Anthropic with several gigawatts of TPU computing capacity. In June, Broadcom and OpenAI debuted a jointly designed inference accelerator called Jalapeño. The ChatGPT developer expects the chip to provide better performance than current graphics processing units. According to OpenAI, the accelerator's speed is partly the fruit of optimizations designed to reduce data movement. Broadcom expects to generate more than $100 billion in revenue from AI chips next year. Anthropic will reportedly account for more than 40% of that sum.

Broadcom AI debt deal: Broadcom seeks more than $60 billion in latest AI debt deal

The numbers under discussion would potentially bring the total raise to as much as $100 billion, according to the report. Broadcom is in talks with a group of lenders to raise more than $60 billion in debt for an AI chip financing deal that will benefit Anthropic and other companies, Bloomberg News reported on Thursday, citing people familiar with the matter. The financing could include a roughly $30 billion junior debt tranche, while the chip ⁠designer ⁠would guarantee a part of a senior-secured tranche that could range from about $60 billion to $70 billion, the report said. The numbers under discussion would potentially bring the total raise to as much as $100 billion, according to the report. Broadcom plays a crucial role in helping design custom chips for firms like Alphabet and Meta, as tech companies look to ⁠develop chips in-house to reduce their reliance on market leader Nvidia. Broadcom also has chip supply deals with Anthropic and OpenAI. Blackstone ⁠and Apollo Global Management are in talks with Broadcom to participate in the financing, the report added. Blackstone declined to comment, while Broadcom and Apollo did not immediately respond to Reuters' requests for comment on the Bloomberg report. The potential financing follows a partnership that Broadcom, Apollo and Blackstone struck in June to finance a $35 billion expansion of Anthropic's computing capacity using Broadcom's custom chips and networking solutions. The initial commitment was expected to add one gigawatt of computing capacity, while the partnership overall aims to enable more ⁠than 20 gigawatts of compute power for leading AI labs by 2028. The new debt would be issued by a special-purpose vehicle and could be similar to the $35 billion agreement, Bloomberg News said. Tech companies have been increasingly turning to debt markets to fund their costly AI investments. The so-called hyperscalers, including Alphabet, Amazon and Microsoft, have signaled that spending on AI will remain elevated through 2026. (Reporting by Anzar Mehraj in Bengaluru; Editing by Diti Pujara and Leroy Leo)

Broadcom Eyes Up to $100bn in Debt to Finance AI Chips

Broadcom is said to be in discussions with a group of lenders to raise more than $60bn in debt, according to Bloomberg. The deal would finance a structure built around artificial intelligence chips that are notably intended for Anthropic. Blackstone and Apollo Global Management, already involved in an initial €35bn agreement with the group, would take part. The financing could include about $30bn of junior debt. Broadcom would also guarantee part of a secured senior tranche valued at between $60bn and $70bn. In total, the amounts under consideration could therefore reach as much as $100bn. The company is playing a growing role in the race for AI chips by designing custom components for major technology groups. That position has lifted its market capitalization to $1,732bn, ranking it seventh in the US. The initial commitment is expected to add 1 gigawatt of computing capacity, using Broadcom's custom chips and networking solutions. More broadly, the partnership aims to provide more than 20 gigawatts of computing power to leading AI labs by 2028. The new debt could be issued through a securitization vehicle and follow a structure similar to the June financing. This massive project once again highlights the huge funding needs of AI infrastructure. On one hand, it is drawing extraordinary sums into the United States, but on the other, it raises questions about returns on investment and the risk of piling on debt in a largely interdependent ecosystem.