Wireless chip manufacturer Avago Technologies Limited AVGO crossed a milestone today, having shipped over 1 million channels of 25G Vertical Cavity Surface Emitting Lasers (VCSEL), reinforcing its foothold and dominance in the enterprise optical networking market.
The 25G VCSEL offers industry-leading high bandwidth performance and are field-proven, high quality devices. Building on Avago's extensive portfolio of VCSEL intellectual properties, the 25G VCSEL technology drives a series of high-performance fiber optic transceiver modules with applications for next-generation Ethernet, Infiniband, Fiber Channel, PCIe, SAS and high performance computing.
As the need for optical links within data centres expands, so does the requirement of high-speed VCSEL solutions to support high data bandwidth requirements. The established 25 VCSEL technology, coupled with Avago’s broad portfolio of high-speed fiber optic solutions, solidify its prospects in serving a range of consumers.
Based in Singapore, Avago makes RF (radio frequency) chips that are used in the Apple Inc. AAPL iPhones as well as smartphones from Samsung and other mobile-device companies.
In addition to the lucrative growth prospects as an Apple supplier, the company is also set to capitalize on China’s promising growth opportunities as the Chinese market begins to deploy higher-bandwidth cell service on the LTE (long-term evolution) standard. Moreover, as device functionality and complexity increases, RF content in smartphones will see a significant boost. Leading RF players such as Avago, Skyworks Solutions Inc. SWKS and Qorvo are positioned well to reap the benefits of this trend across their wireless groups over the coming years.
Avago has been seeking to boost growth further with accretive acquisitions. Avago's largest deal to date was its purchase of LSI Corporation for $6.6 billion last year, as it sought to expand into the fast-growing storage chip market. Just last month, Avago announced that it will acquire networking company Emulex Corp. ELX for about $606 million.
The management’s ability to successfully integrate these companies by streamlining costs and divesting underperforming units has driven striking earnings accretion, and continues to boost the company’s growth.
Investors seem impressed by Avago’s dominant market position and impressive growth strategies, as evidenced by the company’s share price performance. Like its revenues, Avago's shares have more than doubled over the past year, and have risen over 159% since it announced the LSI deal.
Avago presently sports a Zacks Rank #1 (Strong Buy).
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