During Broadcom’s FY 4th quarter earnings announcement, the company’s wireless unit was no longer regarded as its “core” business and soon thereafter Broadcom’s wireless unit was up for sale. Much has changed in the industry in recent months due to COVID-19 and all the uncertainty it brings with regards to supply chain, consumer demand and market confidence. In these times, liquidity and capital returns remain essential to a company’s performance. Last week at Broadcom’s FY 1st quarter earnings announcement that the company will retain its wireless assets. Further, Broadcom revealed that they are under NDA and have signed a three-year supply agreement with their largest smartphone customer (presumably Apple). The agreement provides “technology and road map alignment in essential RF components” with a focus on 5G phones.
Broadcom’s RF technology is known for is FBAR (film bulk acoustic resonators). 5G technology filters will become critical components of the RF Front End as they will be required to manage the complex number of band combinations and select the correct frequency. Broadcom’s FBAR technology is especially useful in ultra-high 5G frequencies from 2.5 to 4.8 GHz. A new deal in play changes the tide for Broadcom’s strategy with regards to its wireless unit. The certainty of a long-term relationship justifies the capital investment the company will need to make to create a competitive RF offering.
Broadcom’s wireless unit also includes WiFi/Bluetooth/GPS combo chipsets. Last month Broadcom further demonstrated its commitment to its wireless business by introducing the world’s first WiFi 6E client device (BCM4389) for use in the 6GHz band with wider 160 MHz channel bandwidths which doubles speed, lowers latency, provides better battery performance and an improved Bluetooth audio and range experience.
The traditional players in the RFFE market are Broadcom, Murata, Qorvo and Skyworks. Qualcomm’s acquisition of RF 360 and its continued commitment and investment to providing a modem to antenna solution has now made it a viable contender in the RFFE space. Most 5G mobile devices today are using Qualcomm’s Snapdragon 865 and X55 modem-RF system solution. The RFFE is critical to managing the wider frequency ranges, bandwidths and increasing number of antennas required in 5G and has created a new revenue stream in this market space.
Source: OMDIA - Wireless Semiconductor Competitive Intelligence Service
As 5G networks continue to proliferate, the demand for 5G devices is on the rise. Omdia’s Wireless Competitive Landscaping Tool (WCLT) shows that as the demand for devices grew in Q4 2019, the RFFE market experienced strong growth despite the RFFE economies of scale experienced over the past year.
Given the global pandemic of COVID-19, the supply chain for the industry has slowed down considerably and will undoubtedly affect the RFFE revenue growth trajectory going forward.
A piece of certainty in uncertain times bodes well for Broadcom’s financial position and justifies Broadcom’s wireless asset on its balance sheet. The new 3-year agreement for 5G RF components indicates that this large smartphone customer will be the principal driver for Broadcom’s presence in the RFFE market space…at least for the next 3 years.