Chip giant Broadcom (NASDAQ: AVGO) is a key supplier of chips for Apple& # 39; s (NASDAQ: AAPL) a popular line for the iPhone. Indeed, TechInsights recently made a tarde of the latest iPhone KSS Mak, found the Broadcom Vi-Fi / Bluetooth chip, the 3D Touch sensor, and the Avago front-end module (FEM) chip. (The current Broadcom Limited was formed through a combination of Broadcom and Avago.)
Apple is a big buyer of Broadcom, and Broadcom says in its latest 10-K submissions that "total sales to Apple through all channels represent more than 20% of our net revenue for fiscal 2017 and 15% for the fiscal year 2016."
Moreover, Broadcom's sales to Apple were through wireless communications business, which generated $ 5.4 billion – more than 30.6% of Broadcom's total sales. This means that Apple achieved 65% of Broadcom wireless communications revenue in that year.
Although shipments of iPhone devices stagnated in recent years, Broadcom has been able to increase its Apple-related business by increasing the total value of the chips it delivers on each iPhone. Although Broadcom's wireless business suffered a failure this year, as Apple lost some content in the iPhone KSR competitor, CEO Hock Tan is optimistic that his wireless job will return to "double-digit growth in fiscal 2020, after a temporary drop in fiscal 2019. "
It seems that Apple's upcoming transition to 5G wireless support will grow in Broadcom's wireless business. Let's look at the tan's comments.
Growth of Next iPhone and outside
Although Apple is not expected to launch its first iPhone with 5G capability by 2020, Broadcom expects the double-digit growth of revenues in its fiscal 2020 to return. This timing suggests the expectation of a steady increase in the content of the wireless chip in Apple's iPhone 2019.
This is not a surprise, as iPhone next year is likely to be used Intel& # 39; s (NASDAQ: INTC) KSMM 7660 modem, which promises to significantly increase the data rates of LTE data compared to the KSMM 7560 modem, which is in all models this year. This increase in wireless capability should also lead to an increase in Broadcom's content of radio frequency (RF) chips to support dramatically faster wireless speeds from which this modem is capable.
In addition, Tan has indicated that Broadcom is "well positioned to win the platform," pointing to the fact that he lost his business in this year's iPhone KSR. The combination of increasing the complexity of the wireless network, as well as the Broadcom to win the job in the next iPhone KSR, should help Broadcom achieve its ambiance for wireless growth in 2020.
It was said that only getting one year of wireless content growth will not satisfy investors in the long run. Tan said that "with 5G on the horizon, we expect this cadet to be upgraded every year."
"As a result, we maintain a high level of investment as a market transition to 5G," claims Tan.
RF chips are not the only things that sell to Apple (but also other premium smartphone manufacturers), so it's not surprising that the CEO also indicated that switching to an industrial branch according to the advanced 802.11ak standard "will continue to lead us in lead."
"We believe that we are very well positioned to maintain this particular franchise over the next few years," claims Tan.
Ashraf Easa has no position in any of the mentioned stocks. Motlei Fool owns actions and recommends Apple. Motlei Fool has the following options: long January 2020, 150 dollars calls for Apple and a short January 2020 $ 155 call to Apple. Motlei Fool recommends Broadcom Ltd. Motlei Fool has a publishing policy.