Broadcom’s banks are starting to gather about $60bn of financing for AI chips bought by Anthropic and other companies, Bloomberg reported early today. Broadcom (NASDAQ: AVGO) designs custom AI chips, networking semiconductors and software. The deal has not been announced and the report rests on unnamed sources.
The shares closed yesterday at $343.64, down 2.15% from $351.19 on Wednesday. The cause of the fall is unproven; Treasury yields surged and chip stocks were weak in the same session. The close sits below the 50-day average of $375.03 and 19.7% under the $427.76 peak of the 7th of August. Broadcom’s market value is about $1.64tn. Today’s US open is the first trading since the Bloomberg report.
Banks are poised to send syndication letters, the invitations that bring other lenders into a loan, for a $42bn Class A senior-secured tranche, the top-ranking slice of debt, backed by collateral. The deal is yet to be announced.
It follows a disclosure, reported by Reuters from Anthropic’s IPO prospectus, that Broadcom agreed to lend Anthropic up to $42bn. The debt can convert into Anthropic shares. Neither report links the two $42bn figures.
The convertible note could fund about a third of Anthropic’s $125.2bn five-year lease commitment for TPUs, the custom AI processors Google designs with Broadcom. Anthropic is set to become Broadcom’s largest compute customer in 2027. Broadcom projects AI semiconductor revenue of about $115bn in fiscal 2027 and $230bn in fiscal 2028.
The worry is circular financing, where a supplier funds the customer that buys its products, so Broadcom’s returns depend on Anthropic’s ability to pay. Anthropic’s filing says Broadcom’s dual roles create potential conflicts of interest. Robert Leitao, managing partner at Rothschild & Co, said:
It feels that there’s quite a concentrated bet right now on two companies being able to generate enough revenues to support all the financing that’s happened,
Robert Leitao, Rothschild & Co
Broadcom did not comment and Anthropic declined to. The filing adds that certain defaults could make a substantial portion of Anthropic’s lease obligations immediately due.