Evercore Partners’s Patrick Wang today reiterates an Overweight rating on shares of Broadcom (BRCM), and a $40 price target, writing that the company’s connectivity chips (WiFi, Bluetooth, FM radio) will likely be in new phones from both Samsung Electronics (005930KS) and Apple (AAPL) in the next couple of quarters.
Wang’s “checks” suggest Broadcom is maintaining share in Samsung’s Galaxy S” series, of which an “S IV” is widely expected, though Qualcomm‘s (QCOM) a risk given Samsung may be using the company’s “Snapdragon” processor family in some cases:
We conducted a series of checks that indicate BRCM’s combo chip (likely 4335, with 5G WiFi, BT, FM) remains designed into Samsung’s forthcoming Galaxy S4 – across most if not all SKUs. Given BRCM’s current technology lead and software stickiness, it makes sense that Samsung would seek a best in class solution. Unchanged from our last Asia trip (Dec ’12), there continues to be evidence pointing to a greater mix of Snapdragon APs on GS4 than GS3 – counter-intuitive, in our view, but perhaps strategic. While this certainly opens up the possibility, we note that Samsung went exclusively with BRCM on the GS3 even though some SKUs used the 8960 – which offered integrated connectivity.
A widely rumored “iPhone 5S” and a cheaper model of iPhone might provide further upside by Q3:
We believe AAPL will use BRCM’s 43342 combo chip (a/b/g/n, BT, FM) on the iPhone 5S with a ramp starting mid-2013. We also expect the LC iPhone SKUs (launching 3Q) to continue using BRCM as well. This supports the robust 3Q build (+14% QoQ) in our model.
Broadcom shares today are up 5 cents at $32.50.
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