Broadcom Inc (NASDAQ: AVGO) Believes Slowed Sales Might Save it From a Future Crash

Broadcom Inc has decided to sacrifice its sales, and its explanation has sparked a lot of questions. However, the company says that the slowing down of sales has been on purpose and that it doesn’t feel worried about lagging behind its peers.

Tan explains the move

It was the company’s  Chief Executive Officer, Hock Tan, that explained. The leader discloses that they have noticed a surge in demand for their chips but insists they must keep focusing on what matters at the moment. As a result, the company has exercised great control over the orders it fills, insisting that the move is for the best reasons.

During Thursday’s conference call, the company said it needed to reduce the chances of creating a glut in the future and that it would be necessary to sacrifice a section of its current sale to reach the goal.

Tan states, “We can show bigger numbers, but that means we will build inventory in the wrong places. The company is applying discipline to supply and focusing on where it’s really needed.”

Analysts say it is a rather unusual move to witness a major chipmaker resort to a serious action such as suppressing sales deliberately. The company operates in a $400 billion semiconductor market, and it hopes the various strategies will enable it to scale higher. 

The spike

Reports indicate that there might soon be a significant spike in demand, and that is such a relief considering how the Covid-19 pandemic swept most businesses off their feet. 

Tan doesn’t mean to be pessimistic when he outlines that the demand isn’t sustainable. In other words, some companies might succeed in selling out many chips currently, but it is improbable that the situation will remain the same in the long run. The leader says the demand might go down later.

Tan has impacted the chip industry in many ways. For example, he has succeeded in striking a series of acquisitions that have sparked significant transformations. As a result, his company currently stands out as one of the biggest developers of electronic components.

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Published by Lisa Ray

Lisa has a Bachelor of Arts in journalism from Purdue University and 3 years of experience in the publishing field.

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