At CES, it seems that Broadcom (NASDAQ: BRCM) was more than eager to show off two of the most important bits with respect to the company's cellular strategy. The first was a reference platform sporting the company's brand new M320 integrated system-on-chip packed with an integrated LTE modem, courtesy of the Renesas Mobile acquisition. The second was the company's upcoming high-performance, category-6 slim modem. It finally looks like Broadcom is set to deliver.
The integrated SoC
The first thing that Broadcom showed off was its dual-core, category-4 LTE SoC platform. It's a dual-core Cortex A9 coupled with a 150Mbps LTE modem. The nice thing about Broadcom's platform solution is that it is a complete turnkey cellular solution with plenty of Broadcom content. Modem, apps processor, and connectivity (Wi-Fi, NFC, GPS, etc.) all come from Broadcom. That means that smartphones that sell with this platform could generate a pretty sizable amount of revenue per unit, perhaps north of $20.
The competition in this space is actually not all that prevalent outside of the market leader, Qualcomm (QCOM 1.94%), which has been shipping integrated LTE with its apps processors for several years now. The good news for Broadcom is that it's starting essentially from nothing. The company's 3G business is falling off rapidly, which isn't all that great for Qualcomm's chip business, since it will now face price competition and/or market-share loss. However, luckily for Qualcomm, Broadcom's SoC is pretty low-end, meaning that the higher end is safe -- at least for now.
The slim modem
The other interesting part that Broadcom apparently teased at CES but didn't formally announce was its category 6 -- or 300Mbps -- slim-modem. This is a discrete modem similar to Qualcomm's Gobi modems and Intel's (INTC 2.19%) XMM series of modems. Broadcom showed off this new slim modem exhibiting 300Mbps downlink connected to a base-station emulator. This is encouraging, but the one thing to keep in mind is that we saw a similar demo last year for Broadcom's in-house BCM21892, which ended up eventually getting scrapped.
That being said, if Broadcom can deliver on its promise here, then it -- along with Qualcomm and Intel -- will be in a league separate from all of the other slim-modem vendors. The only question is on the long-term viability of the slim modem as SoCs become much more integrated. They may stick around for maybe two or three generations, but at some point -- particularly for handheld, power-constrained devices -- it makes sense to simply integrate the baseband.
Foolish bottom line
Broadcom has certainly come a long way. As long as the company's infrastructure and broadband businesses continue to do well, there's no reason why this stock shouldn't be able to find its way to the $34-$35 level. That's where it was before the news became decidedly negative and the high end of the smartphone market began to show signs of a slowdown. If it can deliver on its cellular promises this year, it should be able to reach that level.
