Shares of chip maker Broadcom (BRCM) are down 2 cents at $33.69 despite an upbeat note this morning from RBC Capital’s Doug Freedman, who reiterates an Outperform rating, and a $45 price target, writing that the company’s announcement this morning of a chip for “long-term evolution,” or LTE, the wireless broadband standard, could finally help it land a deal with Apple (AAPL) based on power savings. The chip is due out in 2014. Most baseband radio parts today are supplied by Qualcomm (QCOM)
The announcement is a “clear incremental positive” for Broadcom, even if the 2014 time frame is further out than some would have liked:
In our view, this chip could be the baseband chip that gets them into Apple. We are encouraged that BRCM is entering the LTE supplier group at LTE-Advanced (carrier aggregation) and not just LTE. We do feel that Apple is currently one of the customers sampling. While it�s too early to determine if BRCM grabs the Apple win, we feel the solution is currently generating strong interest from the OEM, being a very viable product for their road-map (TD-SCDMA compatible). The BCM21892 is a thin modem with no applications processor, targeted for the high-end market where the baseband and applications processors are often separate. We highlight that the chip does not offer legacy Qualcomm CDMA EV-DO support. The chip allows for higher performance at lower price points due to the increased levels of integration (portion of the RF functions are now on single chip vs. dual-chip solutions presently in the market) resulting in a smaller footprint. The time-frame of 2014 could be later than what some investors expected. Given timing to production, we encourage investors to be prudently conservative until design wins and volumes can be initially measured.
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