Irvine-based Broadcom Corp. has entered the 4G race with a new chip geared for the LTE smart-phone market that could lead to more business from Apple Inc.
The company said last week that smart phone makers are sampling its radio and cellular baseband chips, which are the building block for the communications systems in mobile phones. Broadcom’s 4G baseband chips are designed to allow peak speeds in Long-Term Evolution networks and longer battery life. They’re also much smaller than current standards.
The company’s 4G chip will be introduced at the influential Mobile World Congress later this month in Barcelona, Spain, with an expected release in 2014.
The recent announcement of the new chip gives Broadcom a boost as it enters a new segment in the 4G smart-phone market that’s been dominated by San Diego-based rival Qualcomm Inc.
Qualcomm shipped 86% of the 47 million LTE chips sold last year.
Samsung Electronics Co. in South Korea entered the fray last year and is nearing 10% market share, according to industry experts.
Nvidia Corp., Intel Corp. and Renesas Electronics Corp. also have started to ship LTE chips.
Broadcom’s new chip could mean new business with the next-generation iPhone made by Apple, according to Doug Freedman, an analyst in the San Francisco office of Toronto-based RBC Capital Markets LLC.
“This could be the baseband chip that gets them into Apple,” Freeman wrote last week in an investor note. “We do feel that Apple is currently one of the customers sampling.”
Broadcom did not disclose its customers or potential customers.
The company’s 4G chip carries several potential benefits for Apple. It’s billed to enable high-definition voice calls; combine radio and cellular functions on a wafer-thin surface area that’s 35% smaller than current standards; reduce power consumption by 25% compared with older LTE modems; and support other LTE technologies, such as 3G.
“While it’s too early to determine if Broadcom grabs the Apple win, we feel the solution is currently generating strong interest,” Freeman said.
2nd-Largest
Apple was Broadcom’s second-largest customer last year, behind Samsung.
The Cupertino-based company accounted for 14.6% of Broadcom’s record $8.01 billion in sales last year.
Broadcom is known to have a number of chips in Apple’s products, including iPhones, MacBook Airs, iPods and other products.
Apple sold a record 47.8 million iPhones in the December quarter, up 29% from a year earlier. The product line—Apple’s largest source of revenue—drove record quarterly sales of $54.5 billion and profits of $13.1 billion.
Compatibility
Broadcom’s chip also is compatible with current LTE applications used to power smart phones in Asia, and particularly China, which is home to 1.1 billion mobile phone subscribers.
“That (compatibility) plays well into our strategy of driving smart-phone growth in China,” said Lars Johnsson, senior director of product marketing for mobile LTE platforms in Broadcom’s Mobile and Wireless Group.
Wireless service providers around the world, from China Mobile Ltd. in Hong Kong to New York-based Verizon Communications Inc., are in various stages of rolling out 4G networks and have earmarked billions of dollars to expand coverage areas to meet demand in the explosive smart-phone market.
Englewood, Colo.-based market tracker IHS Inc. estimates that more than 1 billion people and 3 billion devices will be on LTE networks by next year.
Broadcom first entered the LTE segment in late 2010 with its $316 million acquisition of Santa Clara-based Beceem Communications Inc.
Broadcom has been a longtime leader in connectivity chips that power Wi-Fi, Bluetooth, GPS and other applications. It largely acquired its 4G expertise through the Beceem buy, according to Johnsson, who joined Broadcom with the deal.
Broadcom believes its strategy to integrate Beceem’s specialty in 4G with its long-standing strengths will go over well with smart-phone makers looking to implement its technology suite and lower costs.
Qualcomm appears primed for the challenge as it prepares for the midyear release of its Snapdragon processors that carry an upgrade for third-generation LTE.
Johnsson conceded that Qualcomm is the “early leader” on LTE, but said Broadcom aims to win a place in the market with its new chip.
“We have the technical strength, the execution, and the ability to get into the market and be successful,” he said.