Broadcom loss of Apple socket immaterial for 2-plus years, says BofA

BofA analyst Vivek Arya noted that Bloomberg reports that Apple (AAPL) will begin developing in-house Wi-Fi/Bluetooth chips with eyes on replacing a Broadcom (AVGO) socket by 2025 as well as replacing Qualcomm (QCOM) modems by 2024. Arya estimates that Broadcom supplies Apple with roughly $30 of content per device. Assuming about $5-$10 of content at risk, he estimates about a $1.5B-$2.5B potential impact on the topline, but adds that this could be reduced if the company were to complete its pending acquisition of VMWare (VMW). While saying "any loss of business at a prominent customer such as Apple is not a positive," Arya said no impact is expected for the next two-plus years and added that Apple exposure tends to depress trading multiples so less Apple could imply a higher multiple. Arya maintains a Buy rating and $680 price target on Broadcom, calling it "one of our preferred cloud semi vendors."