Wunderlich Securities has issued a positive assessment of the chances of Israeli semiconductor company Ceva Inc. (Nasdaq:CEVA); LSE:CVA) winning a share of the market for technology supporting advanced driver assistance systems (ADAS), ranging from safety warning systems to fully driverless vehicles.
Wunderlich rates Ceva "Buy", with a $28 price target. This compares with a current market price of $23.60.
Ceva has announced ISO 26262 compliance in collaboration with Yogitech. ISO 26262 is standard developed by the International Organization for Standardization that includes requirements to ensure safety for complex automotive systems. "For CEVA it is a milestone of approval for compilers and software associated with Advanced Driver Assistance Systems (ADAS), including fault tolerance and redundancy. Yogitech provided a consulting role that we believe is recognized by automotive OEMs and tier-1 suppliers; this positions CEVA alongside Mobileye and the Freescale operation of NXP as a solution-enabling supplier," Wunderlich's review states.
"Mobileye appears to be focused on OEMs like Tesla that have internally developed neural networks for ADAS and autonomous vehicles. NXP appears more focused on tier-1 suppliers to OEMs for active safety systems - more for driver warnings than for the autonomous driving functions Tesla has begun to provide. With CDNN, CEVA is positioning the XM4 to compete with Mobileye and NXP (or others) by enabling tier-1 or vertically integrated OEMs to complement a variety of neural network initiatives, whether they be associated with the video/imaging data of Alphabet, Facebook, Apple, or others.
"Self-driving cars may be far in the future, but the building blocks that start with active safety involve a significant amount of content. Expect systems involving large numbers of sensors, eventually scaling to 8-10 cameras per car and a comparable number of SoC functions that for CEVA wins would each involve XM4 cores that we expect to carry a mid-to-high single digit royalty dollar value per core. Therefore, while automobiles are produced at a rate that is an order of magnitude or more below the volume of smart handheld devices, the content per car may eventually be more than an order of magnitude above that of a handheld device.
"The neural networks aggregating and acting on sensor data to enable autonomous vehicles are clearly beyond the scope of complexity needed for other consumer applications. However, ADAS is driving the technology and training data bases for other machine vision applications. Therefore the ISO 26262 milestone qualifies CEVA to be in a race that can yield adoption for simpler, nearer-term applications. We expect this type of usage to extend beyond active safety to include Internet of Things (IoT) and smart device functions like facial recognition. For this reason we expect XM4 to be a near-term driver of licensing revenue for CEVA.
"CEVA has not provided brand details of XM4 licensees; management commentary indicates there have been several semiconductor companies, some of which may eventually serve the ADAS market but surveillance applications appear to be nearer term. The company also announced a tier-1 OEM subsystem provider, but has not said who; we believe this customer is in the class of Bosch, Continental, Delphi, Denso, or Toshiba," says Wunderlich.
Published by Globes [online], Israel business news - www.globes-online.com - on December 31, 2015
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