Jefferies & Co.’s semiconductor and networking analysts –�Sundeep Bajikar,�Mark Lipacis,��George C. Notter,�James Kisner, �and Cynthia Meng –�this morning offer some thoughts on the transition to “cloud” computing, and in particular, the build-out of the essential 100-gigabit optical ethernet links that will connect all that data center gear.
In particular, the development should benefit Broadcom (BRCM), which will make so-called “serializer/deserializer” parts, or “SERDES,” for 100-gig, via its announced acquisition of Netlogic (NETL), and also Inphi (IPHI), which also makes SERDES, as well as the “clock data recovery,” or CDR, chip, and something called the, transimpedance amplifier, or TIA, all of which are essential parts of the physical transmission of the signal in a 100-gig network plugs.
New second-generation plugs for 100-gig are going to enter the market late next year, and will cost companies 70% less than the current gear, the authors write. That will mean a broad jump from 10-gig in North American and Europe, they expect.
Trading at 2 times cash on the books, Inphi is a “call option” on the 100-gig movement, they write. Its partnership with Cisco Systems (CSCO), moreover, may help Inphi maintain a technology edge versus Finisar (FNSR) and Semtech (SMTC).
As for Broadcom, “we think BRCM, through its acquisition of NETL, could become a significant player in 100GE, with the introduction of its next-generation CMOS SERDES parts, potentially as early as 1H12.”
Both Broadcom and Inphi shares are rated Buy by Jefferies.
Shares of Braodcom are up 10 cents, or 0.3%, at $34.13, while shares of Inphi are up 3 cents, or 0.4%, at $8.65.
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