Billions of dollars bet on customization! Meta deepens chip ties with Broadcom Inc., Chen Fuyang steps down as Meta director to avoid suspicion.

Meta Platforms (META.US) announced an expansion of their multi-billion dollar partnership with Broadcom Inc. (AVGO.US) to jointly design and manufacture custom chips to support the social media giant's artificial intelligence business. According to the agreement, the two companies will collaborate to develop multiple generations of Meta Training and Inference Accelerators (MTIA), with the partnership framework extending until 2029. Additionally, it was disclosed that the CEO of Broadcom Inc., Hock Tan, will officially step down from the Meta Board of Directors after his term ends at the annual shareholder meeting. In a statement released by both companies on Tuesday, this partnership includes a commitment to develop chips capable of providing over 1 gigawatt of computing power. The agreement, estimated to be part of a multi-billion dollar continuous deployment plan, is planned to expand to multiple gigawatts with the support of Broadcom Inc.'s technology. 1 gigawatt of power is enough to simultaneously power approximately 750,000 US households. Simultaneously with this significant business development, there have been key adjustments to Meta's board structure. Broadcom Inc. CEO Hock Tan announced that he will no longer seek re-election to the Meta Board of Directors. Hock Tan joined the Meta board in early 2024 to assist in enhancing Meta's hardware infrastructure and supply chain layout. However, as the scale of their commercial dealings in custom chips rapidly expands, in order to avoid potential conflicts of interest and ensure transparency in corporate governance, Hock Tan has chosen to step down from the decision-making level and instead serve as a strategic advisor on Meta's custom chip roadmap, continuing to provide guidance on technological advancement. Additionally, Tracey Travis, former executive of Estee Lauder Companies Inc. Class A, will also be stepping down from the Meta board after serving for six years. It is worth noting that Meta's board of directors has undergone significant changes in recent years. Early last year, the company announced the appointment of five new directors within a short period of time, one of whom former Trump advisor Dina Powell McCormick has since resigned to focus full-time on Meta's artificial intelligence infrastructure projects. Broadcom Inc. has collaborated with Meta in developing custom chips. This effort has become increasingly important for Meta as the company is investing billions of dollars in building infrastructure to compete in the field of artificial intelligence. Meta is developing its own chips to help reduce costs and reduce dependence on third-party suppliers like NVIDIA Corporation (NVDA.US) and AMD (AMD.US). Meta has committed to investing billions of dollars in these two chip manufacturers for purchasing artificial intelligence processors and other hardware. In terms of technological development, the collaboration between Meta and Broadcom Inc. is pushing the industry to the forefront. The two companies plan to collaborate in developing the industry's first AI computing accelerator based on a 2-nanometer (2nm) advanced process technology, aiming to significantly improve energy efficiency and processing performance in data centers. Meta has planned four new chip series, including MTIA 300, 400, 450, and 500, to optimize the social platform's recommendation algorithms, content ranking, and large-scale inference tasks through self-developed hardware. In a statement, Mark Zuckerberg said, "Meta is working with Broadcom Inc. in chip design, packaging, and networking to build the enormous computing infrastructure we need to provide personal superintelligence for billions of people. As we initially deploy custom silicon chips with over 1 gigawatt of power, gradually expanding to multiple gigawatts over time, this partnership will bring higher performance and efficiency to all the products we are building." For Broadcom Inc., this deal marks the latest expansion of their custom artificial intelligence chip business, which aims to boost company revenue and investor enthusiasm while attempting to become a viable alternative to NVIDIA Corporation. Earlier this month, Broadcom Inc. disclosed a long-term agreement with existing customer Alphabet's Alphabet Inc. Class C (GOOGL.US), in which they will collaborate on TPU chips and supply these chips to artificial intelligence startup Anthropic PBC. Certain aspects of this agreement had been discussed previously and will be valid until 2031. Hock Tan stated in his statement that the initial phase of this agreement "is just the beginning of a multi-year, cross-generational roadmap designed to serve the trajectory of large-scale growth in the coming years." Boosted by the news of the expanded partnership agreement with Meta, Broadcom Inc.'s stock price rose by approximately 3.42% in after-hours trading. The stock closed at $380.78 on Tuesday, showing a 10% increase since the beginning of the year. Meta's stock price remained relatively stable. Broadcom Inc.'s stock price has been active in the secondary market, reflecting investors' optimism about the growth potential of Broadcom Inc.'s ASIC (Application-Specific Integrated Circuit) business. Currently, Broadcom Inc.'s custom chip business has become a key pillar of its annual revenue, and with Meta as its core customer, the deep ties between the two will have a profound impact on the competitive landscape of the global AI semiconductor market.