Apple Supplier Broadcom Forecasts Big Rebound in Wireless Chipsby
Broadcom Ltd., a supplier of connectivity chips used in Apple Inc.’s iPhone, forecast more than 20 percent sequential growth in its wireless division this quarter as a major customer gets ready to introduce a new phone.
“It’s largely the certain North American company that’s driving the bulk of the growth,” Broadcom Chief Executive Officer Hock Tan said on a conference call late Thursday. “It’s the beginning of the ramp for their next-generation phone.”
Tan, whose company said Apple’s contract manufacturer Foxconn accounts for more than 10 percent of its sales, predicted that wireless revenue will surge in the “mid-20 percent” range in the three months ending July 31 from the prior period. While the company is coming off a quarter when orders were weak, he said, the jump is indicative of the preparations for the normal launch of a new product.
Broadcom, which supplies the Wi-Fi and other short-distance connectivity chips in the iPhone, may be signaling that Apple is expecting the usual surge in demand for a new version of its flagship product, at least initially.
Broadcom’s outlook may help reassure Apple investors following a 7 percent drop in the stock this year amid concerns about lackluster iPhone demand, made worse by reports that production orders for the latest model, set to be introduced later this year, were less than some suppliers had expected. Taiwan Semiconductor Manufacturing Co. may see shipments of iPhone chips in the second half of the year shrink to 70 percent to 80 percent of the year-earlier level, Nikkei reported in May.
Broadcom made the comments as part of its fiscal second-quarter earnings report. The company, which led a wave of consolidation last year to become one of the world’s top 10 chipmakers, predicted third-quarter sales that may top analysts’ estimates, helped by stronger demand for parts for mobile phones and networking. Adjusted second-quarter revenue also came in higher than projected.
Revenue in the current period will be $3.75 billion, plus or minus $75 million, the Singapore-based company said Thursday in a statement. That compares with an average analyst estimate of $3.7 billion, according to data compiled by Bloomberg. Broadcom stock rose as much as 7.7 percent in extended trading following the announcement, after earlier closing little changed at $154.91 in New York.