Broadcom (NASDAQ:AVGO) is expanding its footprint in Japan's artificial intelligence chip ecosystem through a new partnership with NTT to develop optical semiconductor devices designed to cut data center power use by up to 50%.

Broadcom is strengthening its global AI leadership as it teams with Japan's NTT to produce advanced optical chips by 2026, aiming to tackle the soaring energy demands of AI data centers while boosting processing speed and efficiency.

NTT aims to produce an advanced optical semiconductor device in 2026, partnering with Broadcom and other chipmakers to curb the surging power demand from AI data centers, Nikkei Asia reported on Tuesday.

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The collaboration focuses on developing optical-based semiconductor packages that replace traditional electrical wiring with optical signals. The shift has the potential to double processing speed and capacity while cutting data center power consumption by up to 50%.

NTT said the devices will play a central role in its Innovative Optical and Wireless Network (IOWN) initiative, which aims to create a more energy-efficient digital infrastructure to support global AI expansion. The company plans to market the technology to U.S. firms building generative AI systems.

Broadcom's stock has surged 45% year-to-date, outperforming the Nasdaq 100's 19% gain, as demand for its custom chips and expanded VMware infrastructure software business grows amid the AI boom.

The company is shifting from a smartphone component supplier to a major player in AI chips and networking, capitalizing on the rapid expansion of data centers by leading technology firms.

Investor interest in Broadcom intensified after reports confirmed its partnership with OpenAI to produce custom AI processors aimed at mitigating GPU shortages that have slowed new ChatGPT deployments.

Broadcom disclosed a $10 billion order from OpenAI, which CEO Hock Tan said would create immediate and substantial demand.

Reflecting this momentum, the company raised its fiscal 2026 AI revenue growth outlook to 50–60%, projecting AI chip sales could reach $6.2 billion next quarter.

Price Action: AVGO stock was trading lower by 0.02% to $335.43 premarket at last check Tuesday.

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