Benchmark: Ceva one of main beneficiaries from iPhone 7

Gideon Wertheizer picture: Tamar Matzapi
Gideon Wertheizer picture: Tamar Matzapi

"Intel is inside, and with it, so too is Ceva."

According to investment bank Benchmark Company, Israeli signal processor designer Ceva Inc. (Nasdaq:CEVA); LSE:CVA) is "one of the main beneficiaries from the launch of the iPhone 7/7+." Benchmark bases its assessment on teardowns of the new Apple smartphones.

Benchmark analysts Gary Mobley and Plamen Sirakov note that Apple's smartphone market share and unit sales are declining, but add that "Despite Apple's woes in the past year, many pay close attention to components used in Apple's iPhone flagship."

As for Ceva, the analysts write: "It’s official! Intel is inside, and with it, so too is CEVA. For the first time, Intel’s thin modem is used in the iPhone, at least for some versions of the iPhone 7/7+. Qualcomm’s thin modem continues to be used in CDMA versions of the phone including those used on networks owned by Verizon, Sprint, most Chinese operators as well as those operated in Hong Kong and Puerto Rico, according to ChipWorks. Just as Qualcomm and Intel are splitting the thin cellular modem business with Apple, they too are splitting the associated RF and PMU content.

"According to our sources and calculation, Intel and Qualcomm may split the thing modem supply 50/50-, and if true, our FY17 non-GAAP EPS estimate for CEVA would jump by as much as $0.25. To be more specific, we are modeling 50% 4G LTE royalty units growth for CEVA in FY17, and Apple alone could account for the entire delta. One must also consider tremendous growth and market share gains for CEVA-based Leadcore, Spreadtrum and Samsung LTE modems.

"CEVA’s DSP IP is NOT used as part of the dual-camera image processing in the iPhone 7. However, the trend, in general, toward dual cameras should drive future licensing opportunities for CEVA and should drive design wins for CEVA’s existing 30+ vision and imaging licensees.

"While teardowns available today cannot confirm this, we also believe CEVA's BT IP is being used in the AirPods. While the high price ($159), short battery life (five hours) and fear of losing the Pods may limit the unit sales potential of the AirPod, CEVA generates $0.005 in royalty per AirPod unit sold."

Published by Globes [online], Israel business news - www.globes-online.com - on September 19, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Gideon Wertheizer picture: Tamar Matzapi
Gideon Wertheizer picture: Tamar Matzapi
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