Broadcom (AVGO Quick QuoteAVGO - Free Report) recently announced that it has formed a strategic partnership with Tencent (TCEHY Quick QuoteTCEHY - Free Report) to accelerate the adoption of high bandwidth co-packaged optics (CPO) network switches for supporting cloud infrastructure.

Under this partnership, Broadcom will provide the 25.6-Tbps Humboldt CPO switch device that features its StrataXGS Tomahawk 4 switch chip, directly co-packaged with the four 3.2-Tbps Silicon Photonics Chiplets In Package (SCIP) optical engines.

Tencent built the system architecture and helped Broadcom develop hardware and software for the field deployment of the 25.6-Tbps CPO switch system.

The newly-formed 25.6 Tbps is ready for data center deployment and will attract new customers as the system design supports multiple remote laser modules and provides more than 50% optical interconnect power consumption savings.

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Broadcom’s Tencent Partnership to Help Expand Portfolio

Broadcom is a premier designer, developer and global supplier of a broad range of semiconductor devices, focusing on complex digital and mixed-signal complementary metal-oxide semiconductor (CMOS)-based devices and analog III-V-based products. AVGO is benefiting from rising demand for semiconductors globally.

However, Broadcom is looking to diversify its business operations to address certain key megatrends and changes in the market like rising demand for cloud infrastructure to protect its revenues from the prevalent supply-chain constraints in the semiconductor industry and the intensifying geopolitical tensions.

Even though AVGO’s semiconductor solutions revenues totaled $6.23 billion in second-quarter 2022, up 29.2% year over year, investors are wary of its top-line growth due to the current macroeconomic issues.

Broadcom, which currently carries a Zacks Rank #3 (Hold), has fallen 21.3% in the year-to-date period compared with the Zacks Electronics - Semiconductors decline of 25.1%. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

To diversify its product offering, Broadcom is building strategic partnerships like its peer Cisco (CSCO Quick QuoteCSCO - Free Report) in the broader tech sector.

Cisco recently expanded its business partnership with General Dynamics Information Technology , a business unit of General Dynamics (GD).

To reach out to more customers, Cisco is strategically forging relationships with other companies. Cisco and GDIT are expanding their partnership of 30 plus years to address rising demand for IoT in different government organizations.

The growing adoption of cloud infrastructure attracted various tech companies to operate in the cloud infrastructure industry.

This prompted the industry to demand high bandwidth network switches, which can be deployed at lower cost and reduce power consumption.

Evidently, CPO solutions are currently in high demand in the market, which is aiding rapid growth of bandwidth inside a data center, driven by AI or ML and networking workloads.

To benefit from the current upbeat demand scenario for CPO solutions, Broadcom in partnership with Tencent developed the world’s first 25.6-Tbps CPO system for hyperscale data center field deployment.

Also, AVGO has been investing heavily in executing a host of strategic acquisitions to penetrate the cloud solutions market.

Broadcom announced that it is acquiring VMware for a whopping $60 billion to snap up one of the biggest takeover deals of the year.

VMware is a pioneer in virtualization software that consolidates applications and programs on a smaller number of servers. VMW will help Broadcom tap the hybrid cloud market and aid in its top-line growth in the coming quarters.