The semiconductor industry was shaken this week as leading artificial intelligence company Anthropic announced it would purchase nearly one million AI chips directly from Broadcom, in a deal valued at an estimated $21 billion.

The massive order has propelled Broadcom — a company that typically keeps a low profile — into the spotlight, highlighting its transformation from a behind-the-scenes chip supplier into a central player in the AI hardware market. Over the past three years, Broadcom ’ s stock price has surged nearly sevenfold, pushing its market capitalization above $1 trillion and making it one of only 11 companies worldwide to reach the trillion-dollar club.

At the helm of Broadcom is 74-year-old Malaysian-Chinese CEO Hock Tan, widely known for his strict management style and high compensation. Tan commands an annual salary of $162 million, surpassing even Apple CEO Tim Cook, earning him the nickname "Emperor of Wage Earners."

Tan ’ s approach to business is simple but unyielding: technology must be fully commercialized. Within Broadcom, departments are ranked quarterly by profit performance, with the bottom three marked by a "red line" and at risk of elimination. The company ’ s culture of extreme frugality extends from the CEO to entry-level employees: everyone flies economy on business trips, free coffee is absent from headquarters, and even basic office supplies are tightly controlled.

Yet this stringent efficiency has enabled Broadcom to secure orders from top technology companies such as OpenAI and Meta, positioning the firm for remarkable growth amid the AI boom.

Broadcom: From Background Player to AI Powerhouse

The Anthropic order underscores Broadcom ’ s growing prominence in the AI supply chain. The company is supplying Google-designed TPU v7p chips in the form of fully assembled "rack-level AI systems," ready for deployment in Anthropic ’ s data centers. In effect, Broadcom is selling a complete computing solution directly to customers, bypassing Google in the process.

Previously, Broadcom had acted largely as Google ’ s "behind-the-scenes assistant" in chip design. Today, it treats Google as a middleman, delivering both hardware and integrated technical solutions directly to AI companies.

Approximately 60% of Broadcom ’ s revenue comes from chip manufacturing and supporting switches and subsystems. In the AI sector, its core offering is application-specific integrated circuits ( ASICs ) . Unlike general-purpose GPUs such as Nvidia ’ s, ASICs are custom-built for specific tasks, providing efficiency and cost advantages. This specialization has positioned Broadcom as one of the few companies capable of challenging Nvidia ’ s dominance in AI computing.

The surging demand for generative AI has transformed Broadcom ’ s custom chip business from a previously slow-growing segment into a critical avenue for technology companies seeking to reduce dependence on Nvidia while lowering operational costs. Its client roster now includes nearly every major AI player:

Broadcom has supported Google ’ s TPU development since 2016;

It has secured substantial orders from OpenAI and Meta in the past three years, with CEO Hock Tan even joining Meta ’ s board in February last year;

Microsoft is in talks to collaborate on future chip designs, potentially replacing its current partner, Marvell.

Driven by AI chip demand, Broadcom ’ s financial performance has been robust. Sales exceeded $50 billion last year, up more than 50% over two years, and revenue is projected to surpass $60 billion in 2026.

The Acquisition Maestro: Hock Tan ’ s Strategic Play

Broadcom ’ s meteoric rise is closely tied to Tan ’ s strategic acumen. A veteran of finance roles at General Motors and Pepsi, Tan demonstrated a knack for capital operations early in his career. In 2005, he sold ICS for $1.7 billion, catching the attention of private equity firms Silver Lake and KKR, who later brought him to Avago, Broadcom ’ s predecessor.

Under Tan, Avago, which had roots in Hewlett-Packard ’ s semiconductor division, became a platform for acquisitions. In a landmark 2015 deal, Avago acquired the original Broadcom in a $37 billion reverse takeover, later renaming the company Broadcom. The firm moved its headquarters back to the United States in 2017, transitioning from a pure chip manufacturer into a technology giant encompassing semiconductors and infrastructure software.

Tan ’ s M&A strategy focuses on two pillars: hardware and communications network companies, and software firms. Notable deals include:

Hardware acquisitions: LSI ( $6.6 billion, 2013 ) , original Broadcom ( $37 billion, 2015 ) , Brocade Communications ( 2016 ) ; a 2017 attempt to acquire Qualcomm for $130 billion was blocked by the U.S. government.

Software acquisitions: CA Technologies ( 2018 ) , Symantec ’ s enterprise security business ( 2019 ) , and VMware ( $61 billion, 2023 ) .

Tan ’ s integration approach is famously strict. Following the VMware acquisition, he reduced its product line from 8,000 offerings to four, cut 19,000 employees, and consolidated office buildings from 18 to five. "Any technology that cannot generate high profits is trash and must be decisively abandoned," he has said.

Extreme Frugality and Performance Culture

Although a tech CEO, Tan is pragmatic rather than idealistic. "I ’ m not a semiconductor guy, but I know how to make money and run a business," he has told the media. His quarterly all-hands meetings rank departments by revenue growth, with those consistently in the bottom third facing elimination.

Despite the harsh culture, Broadcom maintains a voluntary turnover rate of just 2.9%, comparable to Nvidia. The company relies on a small cadre of senior engineers, providing them substantial stock rewards to maximize output.

Frugality extends to operational practices: business travel is restricted to budget hotels and economy flights, coffee machines were removed after acquiring VMware, and pens are scarce at headquarters. Tan has dismissed employee concerns, stating bluntly, "Why should we have these? I ’ m not your dad." At Broadcom, the company is treated as a profit-driven machine rather than a family.

Now 74, Hock Tan has no plans to retire, pledging to remain CEO at least until 2030. He has promised a potential stock award of $700 million if AI-related revenue reaches $120 billion by then. Investors closely follow his health and decisions; as one admitted, "Every day I pray that he remembers to take his vitamins, because no one wants to see this helmsman let go."

The Anthropic deal signals that Broadcom is not merely participating in the AI boom — it is shaping the industry ’ s future. With custom ASICs and integrated solutions, combined with Tan ’ s relentless efficiency and strategic vision, Broadcom is poised to challenge incumbents and solidify its role as a cornerstone of the AI era.