Broadcom (NASDAQ:AVGO) shares are gaining Thursday after TF International Securities analyst Ming-Chi Kuo said Apple (NASDAQ:AAPL) has halted developing its own Wi-Fi chips.
The analyst revealed that his latest semiconductor industry survey indicates that Apple has, for a while, paused the development of its own Wi-Fi chip.
Kuo states that Broadcom is the most significant winner of the iPhone 15's upgrade to Wi-Fi 6E and the primary beneficiary of the Wi-Fi industry-standard upgrade to Wi-Fi 6E/7 with a higher ASP.
Broadcom shares are currently up more than 1%.
"More specifically, Apple's previous development for Wi-Fi solution was the Wi-Fi-only chip and not the Wi-Fi+Bluetooth combo chip. From a design standpoint, developing a Wi-Fi+Bluetooth combo chip is more challenging than just a Wi-Fi-only chip. Since most of Apple's products use the combo chip, it would be even more challenging to replace Broadcom's combo chips with its own if Apple decides to do so," explains the analyst.
The analyst added that the processor upgrades slowdown is unfavorable to the sales of end products for Apple, and to ensure that "the world's most advanced 3nm processors" can go into mass production smoothly in 2023–2025, Apple has pledged most of its IC design resources to the development of processors.
As a result, insufficient resources have slowed down the mass production of Apple's own 5G baseband chip and the Wi-Fi chip, claims Kuo.
The analyst went on to state that it is riskier for Apple to use its own Wi-Fi chips aggressively when the industry standard markedly changes, and investors should worry about Apple's Wi-Fi chip impacting Broadcom's Wi-Fi chip business in the foreseeable future.
By Sam Boughedda