Apollo, Blackstone Discuss Financing Approximately $35 billion for Broadcom

Apollo Global Management and Blackstone are negotiating to provide about $35 billion in financing to Broadcom, which could become one of the largest private credit deals in history if it materializes.

According to media reports, the financing will be used to support the development and construction of Broadcom's AI chip business, including a long-term agreement to custom-manufacture tensor processing units (TPUs) for Google. The negotiations are still ongoing, and terms may change.

Hock Tan, CEO of Broadcom, stated in March that the company expects AI chip sales to exceed $100 billion next year. Additionally, if the financing is reached, it will further solidify the private credit industry's position as a core source of funding for AI infrastructure construction.

Shares of Broadcom rose by 3.75% in the day.

Record-breaking financing to support TPU and other AI chip expansions

The approximately $35 billion financing size is expected to break records in the private credit market.

Last year, Meta Platforms' nearly $30 billion data center financing agreement with Blue Owl Capital and Pacific Investment Management Company was previously considered a benchmark deal in the market.

In April of this year, Broadcom disclosed in regulatory filings that the company had signed a long-term agreement with Google to develop and supply custom TPU, and additionally signed an independent agreement to provide networking and other components for Google's next-generation AI racks until 2031.

Furthermore, Broadcom also announced an expansion of cooperation with Google and Anthropic, planning to provide an additional 3.5 gigawatts of new generation TPU computing power for Anthropic starting from 2027, and Broadcom also stated that the parties are discussing deployment support with financial partners.

AI capital expenditure surges, Broadcom at the core of benefits

The demand for funding AI infrastructure is accelerating.

The total investment in AI data center equipment and related capital expenditures by the four largest hyperscale data center operators is expected to reach as high as $725 billion this year, above previous forecasts. Meta is currently preparing a financing plan of about $13 billion for its data center in El Paso, Texas.

In the AI chip market, Nvidia remains the largest supplier of accelerated computing chips.

Broadcom, with its customized semiconductor roadmap, has positioned itself as a significant alternative option in the market, and has successively signed custom AI chip agreements with companies such as OpenAI, driving the company's valuation to soar. The successful negotiation of the above financing will provide crucial financial support for Broadcom to further expand production capacity and deeply bind with major cloud customers.

Entering investment-grade blue chips, private credit boundary continues to expand

As an investment-grade corporation, Broadcom is not the traditional customer base of the private credit market – the industry has always been known for providing financing to low-rated companies. However, top private equity firms have been accelerating their penetration into blue-chip enterprises in recent years.

Apollo has recently reached financing agreements worth billions of dollars with several high-rated companies, including Electricite de France (EDF) and Intel. Apollo previously stated that investment-grade opportunities have the potential to push the overall size of the private credit market to $4 trillion.

The Blackstone Group, for its part, announced that its CEO Steve Schwarzman stated on last month's earnings call that the company's global data center holdings have exceeded $150 billion (including projects under construction), and there are about $160 billion worth of potential pipeline projects under development.

Blackstone had already laid the groundwork for AI infrastructure in 2021 when it acquired QTS, a data center construction company. It has since made it a central investment theme, covering multiple business lines including real estate, infrastructure, private equity, and asset-backed finance.