Dec 5 (Reuters) - Broadcom ( AVGO ) said on Thursday its

custom chip unit, which makes AI processors for cloud providers,

has developed new technology to enhance semiconductor speeds

amid escalating demand for generative artificial intelligence

infrastructure.

Palo Alto, California-based Broadcom ( AVGO ) is among the biggest

beneficiaries of hefty demand for AI-supporting hardware, as

so-called hyperscalers turn to its custom chips to diversify

their supply chains beyond Nvidia's ( NVDA ) costly processors.

The technology, called 3.5D XDSiP, will allow Broadcom's ( AVGO )

custom-chip customers to boost the amount of memory inside each

packaged chip and speed up its performance by directly

connecting critical components.

To do this, it uses manufacturing processes from TSMC

, the world's largest contract-chip producer, including

chip-on-wafer-on-substrate techniques - also known as advanced

packaging - capacity for which is limited, making it a key

bottleneck in the supply chain for AI chips.

There are five products in development that use the new

tech, with production shipments starting in February 2026,

Broadcom ( AVGO ) said.

While Broadcom ( AVGO ) does not identify the cloud companies it is

developing custom chips for, analysts widely believe tech giant

Alphabet's Google and Facebook-owner Meta Platforms ( META )

are among its customers.

"Our hyperscale customers continue to scale up and scale out

their AI clusters," Broadcom ( AVGO ) CEO Hock Tan said in September,

when the company raised its forecast for AI revenue to $12

billion for fiscal year 2024, up from an earlier forecast of $11

billion.

The chipmaker, which also provides networking equipment

for data centers, has three main customers for its custom

processor unit, Tan said in September.

Broadcom's ( AVGO ) central competitor in this space is Marvell ( MRVL )

. The total market for custom chips could grow to about

$45 billion by 2028 and be split between the two companies,

Marvell ( MRVL ) COO Chris Koopmans said on Tuesday.

The market for custom chips will expand further, Summit

Insights senior analyst Kinngai Chan said, adding that Marvell ( MRVL )

and Broadcom ( AVGO ) would benefit from this trend.