Beijing's switch review now overhangs Hock Tan's December buyback call

The regulator moved into the board's quarter

Hock Tan sets Broadcom's capital allocation once a year, at the December board meeting, and the $10 billion repurchase authorization expires on 31 December ¹. Beijing picked the same quarter. On 23 September, a Financial Times report relayed by Reuters↗, which could not verify it, said SASAC had spent weeks surveying Broadcom switches across state-controlled data centers and found they could account for as much as 90% of the equipment at some sites ². Informal guidance to scale back may follow; nothing is banned, and the survey is preliminary ².

The book under review was already flat

China, including Hong Kong, fell from 32% of Broadcom revenue in fiscal 2023 to 17% in fiscal 2025, from $11.53 billion to $11.16 billion, while total revenue climbed from $35.82 billion to $63.89 billion ¹. Every dollar of growth in those two years shipped somewhere else.

Informal guidance has edges

State-run sites already bar Nvidia, and Huawei, H3C and Ruijie are the named domestic alternatives ³⁵. Private sites such as Alibaba's and ByteDance's would reportedly be spared ⁴. Broadcom books revenue by delivery location, and a substantial portion of what ships to China ends up in devices sold in the US and Europe ¹. Asked in September whether Chinese open-weight developers could become customers, Tan declined the escape route: "I'm a believer in closed frontier models" ¹.

December is when the cash gets committed

Tan says Broadcom ends its fiscal year with a record cash pile and argues against prepaying the $56 billion of debt taken at lower rates ¹. The stress signs sit elsewhere: fourth-quarter gross margin is guided down to 73% from about 78% a year earlier, and free cash flow has trailed Street estimates five quarters running, 2.5% short in fiscal Q3 ¹.

The engine underneath is real. Fiscal Q3 revenue of $29.6 billion was up 86%, AI semiconductors hit $16.7 billion, up 221% and now 56% of the company, and the Q4 guide is $34.8 billion ⁶. About $8.5 billion of stock has come back this fiscal year against roughly $24 billion of cash ⁷.

The Street has no Sell to catch this

Forty Buys, seven Outperforms, three Holds, zero Sells, a mean target near $530 against a $352.81 close sitting 26.74% below the peak ¹. The bull case is anchored in Tan's own guidance↗: AI chip revenue of about $115 billion in fiscal 2027 and $230 billion in 2028 ⁹. What unanimity cannot price is scope. Guidance reaching beyond state-run sites, or a December authorization below $10 billion, would be the board marking the risk itself.

Three numbers before New Year's Eve

Fiscal Q4 closes 1 November; last year's results↗ landed on 11 December ¹. Watch the authorization size, gross margin near 73%, and whether SASAC stays inside state-run sites ¹. Beijing is deciding what Broadcom's switches are for; Tan has until 31 December to decide what the buyback is for.