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Smartphones, connectivity space boost Broadcom sales in Q1

Posted: 23 Apr 2015 ?? ?Print Version ?Bookmark and Share

Keywords:Broadcom? broadband access? smartphone? 5G? Wi-Fi?

With revenue driven by high-end smartphone and broadband access markets, Broadcom has announced positive results for 1Q15. Net revenue for Q1 ending March 31 was $2.06 billion, a drop of 4 per cent from the previous quarter and increase of 3.7 per cent YoY. Net income for Q1 was $209 million, or $0.34 per share, compared to $390 million, or $0.64 per share, for 4Q14. Broadband and connectivity revenue was up 13 per cent.

"Our connectivity business continues to strengthen with two sequential quarters of YoY revenue growth [driven by] the ramp of new highly integrated products such as a location hub...and significant customer interest in 5G Wi-Fi chips," Broadcom CEO Scott McGregor said, adding that he expects small cell business to grow.

McGregor added that connectivity is driven by new handsets, 802.11ac ramp-up and 2x2 MIMO. These trends are particularly evident in China, where several manufacturers are moving to higher-end devices.

"You used to think of phones in China in the low and mid-range, but now Xiaomi, Huawei and Lenovo are focusing more on the high-end market. There is an increased opportunity in those customers. They really want [the] better specs they get from our products," McGregor said.

Broadcom's decision to exit from its cellular baseband business impacted its end of 2014 numbers, but did not affect the company as much as anticipated. Much of the $100 million attached to Broadcom's baseband business stayed within the company, as many partner companies with baseband connectivity continue to work with Broadcom on communications.

"The theoretical worse case did not materialise, and we've grown since then," McGregor said.

Broadband revenue was primarily driven by paid TV, tech upgrades to video cells, proliferation of gigabit-capable passive optical networks (GPON) technology in China, and set-top boxes.

"If you want to design wins today you have to have leading products with HEVC and 4K.and Broadcom was first there with that technology," McGregor said of Broadcom's broadband offerings, adding that the area poses an opportunity to gain share outside the United States.

Revenue was also up 6 per cent YoY to $631 million in Broadcom's networking and infrastructure businesses, largely driven by switch products for data centres. Broadcom released eight additional switches recently, McGregor noted.

Growth in infrastructure tends to be a regional phenomenon, one which Broadcom is uniquely tuned to with multiple families of switches and fabrics to "tune to particular markets."

McGregor categorised Broadcom's high-end silicon business as "stronger than ever" due to mix-and-match families of combination and discrete devices, while added sensor hubs will help cement long term customer relationships. The company isn't as driven by smaller process nodes and FinFETs, he said.

"We're beginning to see an end to the 'everything gets better every generation' thing, particularly cost per transistor. If you don't need the performance improvement, you'll probably stay a bit back in the nodes," McGregor said.

McGregor said he expects strong starts in this quarter to continue in 2Q15, with YoY growth trending in connectivity. Q2 revenue will reach $2.1 billion, plus or minus $75 million, with infrastructure and networking business up slightly from Q1.

Deutsche Bank predicted slightly lower revenue for Q2 at $2.06 to $2.07 billion, but added that its estimate may be conservative given the strength in Samsung Galaxy S6/S6 Edge sales.

- Jessica Lipsky
??EE Times

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