The DSP Group Inc. (Nasdaq: DSPG) share jumped 11.6% on Nasdaq yesterday to a price reflecting a NIS 215 million market cap, after the company announced that it had won a substantial contract in the cellular market to supply large quantities of its HDClear chip.
DSPG, which develops special chips for connectivity and voice, did not identify the customer, but said it was "a leading devices manufacturer." The volume of the deal was also undisclosed, but analysts covering DSPG shed a little light on the new contract.
The Dougherty & Company investment bank yesterday said it believes that the customer is Samsung, and that the chip would be put into Galaxy S7 devices, together with Qualcomm's SoC. Dougherty & Company estimated that a third of the devices sold in 2016, 15 million units, would have the chip. The other two thirds of the Galaxy S7 devices will use Samsung's own technology, not that of Qualcomm.
The investment bank's analysts estimated DSPG's 2016 revenue from sales of its chip at $10 million, and now, "If we assume an ASP of ~$0.90, the S7 win alone could be worth north of that."
DSPG's usual market is wireless telephony, but the company has expanded its business to other markets, including cellular.
DSPG CEO Ofer Elyakim said, "We are excited to announce a high volume design win for our HDClear products with a leading mobile OEM, which is expected to contribute to our results this year. This is a milestone event for DSP Group and our mobile business, marking a successful entry into this market."
Another Israeli company linked to Samsung is chip technology provider Ceva Inc. (Nasdaq:CEVA); LSE:CVA). In the two thirds of Samsung's S7 devices that do not include Qualcomm's technology, the Samsung technology used in the device includes a chip based on Ceva's technology.
Published by Globes [online], Israel business news - www.globes-online.com - on January 13, 2016
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