From Morgan Stanley this morning: Semiconductors: BRCM and TXN Lead The Way With DOCSIS 1.1 Certification
Mark Edelstone
On 9/27, the Cable Television Laboratories Inc (CableLabs) certified and qualified the first DOCSIS 1.1 products for compliance. Both Broadcom (BRCM-$26-O-V) and Texas Instruments (TXN-$27-O) were among the first semiconductor beneficiaries. BRCM on the infrastructure side with silicon in 2 DOCSIS 1.1 certified cable headend systems, and TXN with silicon in 2 modem products.
BRCM's cable headend silicon products (BCM3137, BCM3033, and BCM3210B) were utilized in certified systems from Arris (CMTS 1500) and Cadant (C4), and TXN's silicon products (TNETC4042) were utilized in a TXN certified reference design and a Toshiba (PCX2500) modem. We expect cable modems based on BRCM's DOCSIS 1.1 silicon to be certified by CableLabs within the next several months.
This is an important milestone for both companies, as the DOCSIS 1.1 standard represents the next step for data transmission over cable, enabling quality of service (QOS), voice-over-IP, streaming media and tiered data services. Once dominated by proprietary transmission technology, cable data transmission technology has fast become standardized. Gartner Dataquest estimates that 76% of the modems shipped worldwide in 2000 were DOCSIS certified. In 2000, Motorola (MOT-$17-O-V, covered by A. Shah/A. Basu) was the leading DOCSIS modem vendor, shipping 33.4% of all DOCISS modems (source: Gartner Dataquest).
We believe the DOCSIS 1.1 certification is a strong testament to the technology and leadership positions that both companies have secured within the broadband access market. Consequently, we reiterate our Outperform rating and 12-month price targets for BRCM ($60) and TXN ($40).
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