Wunderlich Securities’s Matthew Robison today reiterates a Buy rating on chip technology designer Ceva (CEVA), writing that the Mountain View, California designer of “digital signal processors” could benefit as Nokia (NOK) switches processor makers for its “Asha” line of low-cost smartphones, which have been one of the brighter spots in Nokia’s portfolio.
Robison, in fact, thinks Nokia is preparing to dump Texas Instruments‘s (TXN) “OMAP” processors in favor of those from Intel (INTC) and Broadcom (BRCM) not just from Asha, but going forward as well, with new, as-yet-unreleased handsets.
TI makes its own digital signal processing circuitry, but Intel and Broadcom both use CEVA’s designs in their application processors, he explains:
Checks indicate Nokia is prepared to switch-out T.I. in 3G Asha phones for Intel or
Broadcom as soon as the T.I. volume commitment is consumed/fulfilled [...] The transition away from T.I. will benefit CEVA as both Intel and Broadcom utilize CEVA cores [...] We expect Nokia to announce a new family of low-cost devices with smartphone features by the end of 3Q12. These may be the anticipated, but not formally acknowledged, Meego/Linux derivative known by press and industry as Meltemi. In any case, we expect the new products for the �next billion� Internet users (as described by Nokia CEO Stephen Elop) will use CEVA licensees, not T.I. and not Qualcomm (QCOM), which currently supports Nokia Lumia products. CEVA may not have to wait for next generation. Connecting the �dots� from Broadcom commentary indicating Nokia would not be a 3G customer of significance until next year implied waiting for Meltemi. This no longer appears to be the case. The decline of Symbian appears to have had the second order effect of pushing the transition to CEVA licensees beyond earlier expectations for mid-2012, but we believe Asha is getting traction with low price points and may expedite the transition.
Ceva shares today are down 28 cents, or 1.7%, at $15.90.
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