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Qorvo's New FEM Module to Enhance Efficiency of IoT Devices

Zacks Equity Research

Qorvo, Inc. QRVO recently enhanced infrastructure solutions portfolio with the industry’s first dual-band integratedfront end modules (FEMs) — QPF4800 — in a bid to expand its Wireless Connectivity technology.

The small-sized, highly integrated and efficient new dual-band FEMs support frequency bands ranging from 2.4GHz (gigahertz) to 5GHz. The latest FEMs are primarily designed for Wi-Fi 6 customer premise equipment (CPE), supporting the IoT.

The latest solutions support Bluetooth and BLE, Wi-Fi, Zigbee, LTE and Cellular/NB-IoT, which are not only compact in size but will also aid in extending the battery life of portable products. Notably, Qorvo’s FEMs technology will support speed, latency, reliability and keep a check on the heat emitted. It will also solve connectivity and reliability challenges.

The company is demonstrating its QPF4800 Wi-Fi 6 FEM and other Wi-Fi solutions at IBC 2019 from Sep 13-17.

Further, the latest FEMs comprise power amplifier, low noise amplifier, an RF switch and limiter in a small form factor. It enhances linear output power by 77% as compared to the dual-band FEMs supporting Wi-Fi 5 (802.11ac).

We believe Qorvo is poised to gain traction with these new FEMs as these comply with the designer’s product criteria of a compact form, enhanced efficiency and robust interference mitigation and cost efficiency. Further, these new products are reinforcing the company’s product portfolio.

Shares of Qorvo have returned 27.6% year to date, outperforming the industry’s rally of 24.2%.

Projections Bode Well

Per an EJL research report, shipments for massive MIMO driving radio transceivers are projected to reach 500 million units by 2022. Per Qorvo estimates, the market for massive MIMO base station is anticipated to yield $1 billion by 2022 in RF solutions. The company’s expanding RF product portfolio pertaining to massive MIMO base stations bodes well in the long haul.

Moreover, IoT devices have been gaining significant traction of late. According to Statista, the number of connected IoT devices will hit 31 billion by 2020.

Analyst firm IDC expects worldwide IoT spending to reach a total of $1.2 trillion in 2022. Per IOT Analytics, the number of active IoT devices is expected to grow from 7 billion in 2018 to 10 billion by 2020 and 22 billion by 2025, including devices on the consumer and enterprise side.

Qorvo is well poised to capitalize on this demand on the back of its robust product portfolio, strengthening IoT capabilities and key offerings.

Bottom Line

Expanding portfolio bodes well for Qorvo. The company’s 5G and GaN solutions hold promise. The company is well poised to seize growth opportunities that the corresponding markets offer.

Moreover, robust adoption of the company’s solutions in defense (advanced radars and other electronic warfare products) and connectivity (Wi-Fi and emerging IoT applications) is noteworthy.

The company is well-positioned to capitalize on the opportunities by leveraging its diversified product portfolio, systems-level expertise, R&D and manufacturing scale, and internal assembly and test capabilities.

However, customer concentration, particularly from Apple AAPL and Huawei remains a significant headwind for Qorvo.

Zacks Rank & Key Picks

Qorvo carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Synopsys, Inc. SNPS and Fortinet, Inc. FTNT, both flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Synopsys and Fortinet is currently pegged at 12% and 15.5%, respectively.

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