Broadcom Backstops 43.5 Billion Dollar First Lien in Anthropic's Record 63 Billion Dollar AI Chip Financing Deal
"Some Were Getting Cold Feet": Hock Tan Pays Up, Guarantees The Loss To Get Anthropic's $63 Billion Chip Deal Done
Context
Broadcom agreeing to provide residual value support covering roughly 69 percent of the largest AI debt package on record shows that even top Wall Street banks now demand vendor loss guarantees before lending tens of billions against custom AI silicon.
On October 26, Bank of America, Blackstone, Citigroup, and Morgan Stanley announced a landmark 63 billion dollar special purpose vehicle financing structure to buy Broadcom XPU AI accelerators and networking gear and lease them to Anthropic starting in 2027. Follow up reporting by Reuters, Bloomberg, and ZeroHedge on October 27 revealed that the senior first lien debt totals roughly 43.5 billion dollars, or 69 percent of the package, and that Broadcom is backstopping that entire first lien tranche through residual value support.
Deep dive
New disclosures and financial reporting on Tuesday detailed how Broadcom CEO Hock Tan secured Wall Street backing for Anthropic's record 63 billion dollar AI chip lease facility: by putting Broadcom's own balance sheet behind more than two thirds of the debt. Under the structure announced by Bank of America, Citigroup, Morgan Stanley, and Blackstone, a newly formed special purpose vehicle will borrow 63 billion dollars to purchase Broadcom XPU AI accelerators and networking hardware and lease the racks to Anthropic, with deliveries beginning in calendar 2027.
While Bank of America, Citi, and Morgan Stanley arranged the senior first lien debt and Blackstone committed the second lien tranche, sources told Reuters and Bloomberg that the first lien portion totals approximately 43.5 billion dollars, or 69 percent of the entire financing. To satisfy lenders concerned about how quickly custom AI accelerators depreciate or what happens if lease payments falter, Broadcom agreed to provide residual value support equal to the first lien portion.
According to Broadcom's own investor presentation on the transaction, its potential residual value liability covers the difference between 72.5 percent of the outstanding lease obligations and the market value of the AI racks if returned, with peak exposure expected to reach 43 billion dollars before amortizing to zero on a straight line basis over five years of lease payments. ZeroHedge noted that the structure follows a prior 35 billion dollar Anthropic compute financing with Apollo and Blackstone in which Broadcom provided a backstop of up to 29 billion dollars.
What to expect next
Vendor guaranteed special purpose vehicles are emerging as a critical mechanism for funding multi tens of billions of dollars in frontier AI compute without putting the full debt directly onto a model lab's balance sheet ahead of an IPO. Watch whether credit rating agencies treat Broadcom's 43 billion dollar peak residual value exposure as debt like contingent liability, and whether rival chipmakers face similar demands from banks to backstop hardware depreciation.