Nomura Securities on Communication Equipment/Semiconductors: Small Cells Are Coming - Semi & Vendor Implications
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Rating Summary:
14 Buy, 6 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
14 Buy, 6 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Nomura Securities on Communication Equipment/Semiconductors: Small Cells are Coming - Semi and vendor implications
Analysts, Stuart Jeffrey & Romit Shah, said, "We believe small cell deployments are set to accelerate. The catalysts for this include new chipsets, better network software, and increased competition between equipment vendors. Small cells are expected to take 90% of 2016 market units and 5% of revenue (low ASP). While small cells are cheaper than macro cells operators, we do not expect them to reduce operator investment levels. Small cells largely augment macro deployments and suffer from diseconomies of scale related to deployment, maintenance and backhaul costs.
Key calls:
Alcatel-Lucent (NYSE: ALU)(Neutral, €1.7) seems best positioned to benefit from such a trend. Ericsson (Nasdaq: ERIC) (Buy, SEK 175) has a large installed base to defend, but may defend it given its apparently strong product offering.
Negative for Altera (Nasdaq: ALTR) (Reduce, $33) and Xilinx (Nasdaq: XLNX) (Neutral, $38) as it impacts base-station growth and we expect the mature SoC solution for small cells to move up market.
Positive for small cell SoC vendors –TI (NYSE: TXN) (Reduce $28), Broadcom (Nasdaq: BRCM) (Buy $45), and Qualcomm (Nasdaq: BRCM) (Neutral $60). We estimate small cell SoCs to be an incremental revenue opportunity of $1bn by 2016.
Analysts, Stuart Jeffrey & Romit Shah, said, "We believe small cell deployments are set to accelerate. The catalysts for this include new chipsets, better network software, and increased competition between equipment vendors. Small cells are expected to take 90% of 2016 market units and 5% of revenue (low ASP). While small cells are cheaper than macro cells operators, we do not expect them to reduce operator investment levels. Small cells largely augment macro deployments and suffer from diseconomies of scale related to deployment, maintenance and backhaul costs.
Key calls:
Alcatel-Lucent (NYSE: ALU)(Neutral, €1.7) seems best positioned to benefit from such a trend. Ericsson (Nasdaq: ERIC) (Buy, SEK 175) has a large installed base to defend, but may defend it given its apparently strong product offering.
Negative for Altera (Nasdaq: ALTR) (Reduce, $33) and Xilinx (Nasdaq: XLNX) (Neutral, $38) as it impacts base-station growth and we expect the mature SoC solution for small cells to move up market.
Positive for small cell SoC vendors –TI (NYSE: TXN) (Reduce $28), Broadcom (Nasdaq: BRCM) (Buy $45), and Qualcomm (Nasdaq: BRCM) (Neutral $60). We estimate small cell SoCs to be an incremental revenue opportunity of $1bn by 2016.
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