Qorvo, Inc. (QRVO - Free Report) recently launched five new 5G products. The enhanced 5G infrastructure solutions portfolio now comprises two new integrated front end modules (FEMs) — QPB9329 & QPB9319 — and a wideband driver amplifier — QPA9120. The other two new 2-stage power amplifiers are QPA4501 & QPA3506.
The small-sized, highly integrated and efficient new FEMs support frequency bands ranging from 3GHz (gigahertz) to 39GHz. The FEMs can function on both pre-5G and 5G architecture. Qorvo’s gallium nitride (GaN) technology has enabled it to support the emerging 5G infrastructure.
The company is demonstrating its advanced RF portfolio at IMS from Jun 12-15.
Per an EJL research report, shipments for massive MIMO driving radio transceivers are envisioned to reach 500 million units by 2022. Per Qorvo estimates, the market for massive MIMO base station is projected to yield $1 billion by 2022 in RF solutions. The company’s expanding RF product portfolio pertaining to 5G and massive MIMO base stations bodes well in the long haul.
Prior to this launch, Qorvo had announced two other amplifiers, namely QPF4005 and QPF4006, which it claims to be industry’s first GaN FEMs for 39GHz. In the previous quarter, the company had launched the industry's first 28 GHz GaN on silicon carbide (SiC) FEM for base stations. Notably, the 28GHz product supported the demonstration of Samsung 5G MIMO at the 2018 Winter Olympics.
The company has participated in dozens of 5G field trials and demonstrations. We believe an expanding portfolio enabling 5G deployment augurs well for the company.
Shares of Qorvo have returned 21.3% year to date outperforming the industry’s rally of 6.4%.
New GaN FEMs for Defense Applications
In a separate press release, Qorvo announced that it has launched two new X-band FEMs that find ample application in active electronically scanned array (AESA) radar. The two GaN FEMs, namely QPM2637 and QPM1002 are very compact and EAR99 export-compliant. The products address the requirement for high RF power survivability crucial for mission-critical defense operations.
The GaN FEMs comprise power amplifier, low noise amplifier, an RF switch and limiter in a single package. It can endure up to 4W of input power on the receive side. The products are under sampling to eligible customers.
Per Strategy Analytics data, as revealed in the press release, the demand for RF front end components pertaining to radar applications is projected to surpass $1 billion by 2022, implying a CAGR of 9% over the next five years. The RF GaN devices market for defense applications is expected to grow at a CAGR of 24% over the next five years due to the impressive adoption rate of GaN which is likely to outpace other technology variants.
Moreover, according to a MarketsandMarkets report, the GaN power device market is projected to grow at CAGR of 29.1% to reach $1.89 billion by 2023. The base year 2017 valuation was $0.408 billion and the time period under consideration is 2017-2023.
Introduction of the new products strengthens Qorvo’s GaN portfolio and provides it a competitive edge, in the relevant market. The company is capitalizing on the lucrative prospects in defense by rendering effective GaN solutions.
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.
However, customer concentration, particularly from Apple (AAPL - Free Report) and Huawei remains a significant headwind for Qorvo.
Zacks Rank & Key Picks
Qorvo has a Zacks Rank #4 (Sell).
A couple of better-ranked stocks in the broader technology sector are Western Digital Corporation (WDC - Free Report) and Micron Technology, Inc. (MU - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Western Digital and Micron have a long-term expected EPS growth rate of 19% and 10%, respectively.
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