Today, Broadcom announced the acquisition of Renesas Mobile’s LTE assets including its production-ready and carrier-certified LTE dual-core cellular SoC and patents. This acquisition jumpstarts Broadcom’s LTE progress and puts the company on the LTE map ahead its previous schedule. Broadcom’s original LTE-Advanced chip BCM21892 is expected to debut in early 2014 and would only have contributed materially in 2H 2014. Broadcom is still a minor player in basebands and the company had about 4 percent revenue share in the cellular baseband market in Q1 2013.

Renesas Mobile’s parent company Renesas Corporation announced the shutdown of its modem activities in June 2013. Before the shutdown, Renesas Mobile scored an LTE dual-core SoC design-win with Samsung, but that win came too late for the company. Renesas Mobile’s financial struggles, lack of global customer exposure and unsuccessful venture to integrate IP from multiple companies (Renesas (Hitachi plus Mitsubishi), NEC and Nokia IP) all took a toll and contributed to its collapse. ST-Ericsson, like Renesas Mobile, also struggled with organisational integration challenges and was eventually was taken over by part owner Ericsson, which has taken charge of ST-Ericsson’s 4G LTE thin modems. Unlike Broadcom, Ericsson is only focused on thin modems.

This is Broadcom’s second major LTE-related acquisition after Beceem Communications (October 2010). Broadcom said that the LTE roadmaps of both companies will converge and the company will ramp up its acquired LTE dual-core SoC and will sample a quad-core Cortex-A7 LTE SoC in 2H 2014. We believe with these kinds of products Broadcom can address the mid-tier LTE segment. Broadcom tends to announce products close to launch and we believe the company might release more competitive LTE SoCs (perhaps A15 / A7 combination) in the future.

Renesas Mobile’s LTE SoCs feature Imagination Technologies’ GPU core IP and we expect Broadcom to replace Imagination’s GPU core IP with its own VideoCore IP in future versions. It’s rather surprising that Broadcom didn’t mention Renesas Mobile’s MP6530 quad-core LTE-Advanced SoC (28 nm-based big.LITTLE A15 / A7). Renesas Mobile planned to mass produce this chip in 2H 2013 originally. We believe this product schedule may have been pushed out in order to start off quickly with what’s on hand (Renesas Mobile’s production-ready dual-core LTE SoC).

Currently the LTE market is dominated by Qualcomm, which captured 97 percent revenue share in Q1 2013. We believe Qualcomm’s share will no doubt prove unsustainable in the face of increasing LTE competition next year from Broadcom, Intel, Marvell, MediaTek, NVIDIA and Spreadtrum, which will all produce multi-mode LTE chips for smartphones and tablets.

Broadcom has a successful track record of acquiring and integrating assets that can jumpstart its market share. We believe Broadcom’s proven ability in acquisitions coupled with its strong wireless product portfolio and financial strength will enable Broadcom to emerge as a strong alternative to Qualcomm in the next 12-18 months.

Sravan Kundojjala