ARMH, BRCM, INVN Among Pac Crest ‘Internet of Things’ Beneficiaries
Pacific Crest Securities chip analyst Michael McConnell today reflects on the phenomenon of the “Internet of Things,” much in vogue these days, and concludes that while it is “still early days” for that market, nevertheless investors should be alert to opportunities for several chip makers, including ARM Holdings(ARMH), Atmel (ATML), Broadcom (BRCM), Freescale Semiconductor (FSL), Microchip Technology (MCHP), Maxim Integrated Products (MXIM), NXP Semicondutor (NXP), Silicon Labs (SLAB), and InvenSense.
McConnell describes having talked with ARM, along with startups Apigee, Impinj, Kionix, and Mtell, at a recent Pac Crest “Emerging Technology Summit,” and taking away the impression that the “IoT” is in its “infancy,” and that “plenty of devices are still not connected and represent a lot of opportunities once they are connected to the Internet,” but that “lack of common standards and platform-based solutions is the primary bottleneck to enable the end-to-end ecosystem, not to mention the security issues in the whole system and short battery life of end devices. “For chip makers, this is likely to be a high-volume, lower price kind of market:
From a semiconductor perspective, ARM indicated that the low chip ASP would be not necessary for the whole IoT market given the long tail of IoT from very high-end industrial applications to low-end and high- volume devices. Despite that, we think a large portion of IoT applications, particularly in the consumer segment, would present a low-ASP and high-volume opportunity for semiconductors. In addition, all panelists appeared to agree and embrace pricing decline in IoT devices and semiconductors, which could stimulate adoption and demand of IoT applications. In our view, it might be too early to call if low ASPs and pricing declines would limit the revenue opportunity in IoT and potentially impact gross margin, while we believe sufficient scale would be required to win in terms of profitability.The “wearables” category is over-hyped, McConnell observes....MORE
