Tag Archives: qcom

Rumored Xilinx Bidder Qualcomm Better Off Buying Apple Supplier NXP

Xilinx ( XLNX ) stock rocketed near the close Tuesday on a rumored $15 billion takeout offer, but Cowen analyst Timothy Arcuri says Apple ( AAPL ) supplier Qualcomm ( QCOM ) — often cited as a potential Xilinx buyer — would be better off targeting NXP Semiconductors ( NXPI ). Street Insider first reported the rumor of the offer, citing sources familiar with the matter, but didn’t identify the bidder. Xilinx stock shot up 5.7% near the close Tuesday and was up a fraction in after-hours trading. Arcuri retained his outperform rating and 60 price target on Qualcomm stock. Earlier Tuesday, MKM analyst Ian Ing reiterated his view that Broadcom ( AVGO ) and Qualcomm are potential Xilinx suitors. But Arcuri says Xilinx wouldn’t “move the needle” for Qualcomm, which may not be completely committed to the data center path. Xilinx’s field programmable gate array (FPGA) chips are ideal for data center acceleration, Ing wrote in a research report. “In some ways, Xilinx would clearly accelerate Qualcomm’s data center initiatives, but we wouldn’t view a Qualcomm/Xilinx deal all that favorably for Qualcomm and would much rather see it buy an asset like NXP,” Arcuri wrote in a research report. “This would simply be a huge amount of money to spend for a deal that isn’t transformational.” Acquiring NXP would allow Qualcomm to tap into offshore cash, which wouldn’t be possible in the case of Xilinx, Arcuri noted. And as Xilinx suits up for a FPGA battle against Intel ( INTC ), it’s planning on spending a lot of dough. “If we were Qualcomm, this factor argues it is better off to wait,” he wrote. Still, Xilinx is the singular merchant FPGA player following Intel’s $16.7 billion acquisition of rival Altera late last year, William Blair analyst Anil Doradla noted earlier Tuesday. The rumored takeout bid follows Xilinx’s late Monday analyst day. But Doradla wasn’t too impressed, saying the event “lacked confidence.” Xilinx is focusing on cloud computing, embedded vision, industrial Internet of Things and 5G markets rather than its bread-and-butter wireless and wireline markets.

Did Xilinx’s 2021 Forecast Undercut Intel’s $17 Billion Altera Buy?

Broadly, Xilinx ‘s ( XLNX ) analyst day Monday was an acknowledgement that the field programmable gate array (FPGA) industry will grow less than 10% in the long term, which could hurt the $16.7 billion bet placed last year by No. 1 chipmaker Intel ( INTC ) on FPGA-maker Altera, a William Blair analyst said Tuesday. Late Monday, stand-alone FPGA maker Xilinx reiterated its fiscal 2017 guidance for growth of 4%-8% for sales and 7%-9% for operational expenses. Through 2021, Xilinx expects $750 million in incremental opportunity, but that only represents a 6% compound annual growth rate. FPGAs are chips which customers can program “in the field,” after manufacture, according to their needs. The overall tone Monday was positive “but lacked conviction,” William Blair analyst Anil Doradla wrote Tuesday in a research report. Commentary regarding Xilinx’s bread-and-butter wireless and wireline segments was limited, leading Doradla to say demand “continues to be muted.” “We believe the company is working hard to diversify away from its traditional markets as the company’s core markets continue to face structural shifts and increasingly pose headwinds to the company,” he wrote. Asian product makers are unlikely to pay premium dollars for Xilinx’s high-end FPGAs, and the company’s aerospace and defense spending opportunities are highly exposed to volatile government funding, Doradla wrote. But he kept his outperform rating on Xilinx stock. Xilinx’s commentary Monday centered on growth opportunities within cloud computing, embedded vision, industrial Internet of Things (IoT) and 5G markets. There, Xilinx faces FPGA competition from Intel/Altera and an IoT rivalry with Nvidia ( NVDA ) graphics chips. In morning trading on the stock market today , Xilinx stock nudged up 1%, above 45. Shares have climbed incrementally on seven of the past eight trading days. But Tuesday’s rise underperformed IBD’s 41-company Electronic Semiconductor-Fabless industry group, which was up more than 2% Tuesday morning. Intel stock was up 2.5%, near 31. Xilinx Viewed As Possible Takeover Target Xilinx’s fiscal 2017 investments could lead to greater market share gains against Intel/Altera, Rosenblatt analyst Kinngai Chan wrote in a report. Xilinx sees its 28-nanometer and 20-nm market share at 65% and 80%, respectively. And Xilinx forecasts a one-year lead on Altera in the 16-nm market. This refers to the width of the circuitry etching in chips, so the smaller the manufacturing capability, the more electronics that in theory can go onto a chip. The investments should lead to “robust” growth for patient investors in 2021, MKM analyst Ian Ing says. The competitive landscape vs. Intel looks “benign,” and Xilinx’s uniquely re-configurable chips are ideal for data center acceleration, he wrote in a report. But “we do not foresee Xilinx’s investment time frames shortening from the four-five years from initial investments to material revenues,” he wrote. “Specialty FPGA chips are unique, given that they must go through two complete design and development cycles before volume.” That could drive off potential investors, he wrote, reiterating his belief that Xilinx could benefit from an acquisition by Apple ( AAPL ) suppliers such as Qualcomm ( QCOM ) or Broadcom ( AVGO ). William Blair’s Doradla noted as much — Xilinx remains the singular merchant player in the FPGA market, he said. Ing kept his neutral rating and 45 price target on Xilinx stock.

Apple-Samsung Battle In China To Force Qorvo, Skyworks Volatility

Apple ( AAPL ) and Huawei will take share from Samsung and Xiaomi within the Chinese smartphone market, leading to mass volatility and an inventory work-down for chipmakers like Broadcom ( AVGO ), Qorvo ( QRVO ) and Skyworks Solutions ( SWKS ), an MKM analyst predicted Wednesday. Shares of Broadcom, Qorvo and Skyworks were up a fraction each in early afternoon trading on the stock market today , while Apple stock was down a fraction. Last month, Apple reported March-quarter sales that missed views for the first time since 2003, undercutting chip stocks, which have broadly fallen since. The Apple report bolsters concerns of a smartphone slowdown, fresh off worries that Chinese smartphone saturation would stunt further growth. But, MKM analyst Ian Ing notes, the brimming Chinese market is still buying. Of 1,000 Chinese respondents in an MKM survey, more than 60% plan to buy a new smartphone within the next three to six months vs. less than 25% of U.S. respondents, Ing wrote in a research report. Of those in China, 38% plan to switch brands. “Chinese consumers are even more gadget-friendly relative to U.S. consumers,” Ing wrote. “Ownership is higher across smartphones, PCs and tablets in rank order.” Nearly 97% of Chinese consumers own a smartphone vs. 84% of Americans, but 25% of Chinese respondents plan to add another smartphone account — likely expanding to children and the elderly — vs. only 7.5% of Americans, Ing wrote, suggesting that Chinese users refresh their smartphones annually. Advances in wireless charging and fingerprint sensing will drive further adoption, he wrote. In smartphones, Apple, Huawei and LeTV look likely to take share from Xiaomi, Samsung and Lenovo, Ing wrote. Chinese consumers are more driven by brand (68% vs. 43% of Americans) and less by cost (33% vs. 61% of Americans). Those dramatic swings in share could affect chipmakers like Qorvo and Skyworks, which are 32% and 20% exposed to China, respectively. Ing estimates 40% of Qorvo’s mobile sales stem from China. Fellow Apple suppliers Qualcomm ( QCOM ) and Broadcom are less exposed — mid-teens and less than 10%, respectively, Ing said. “That said, Qorvo is favorably exposed to Huawei as a 10% customer,” he noted.