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Broadcom (AVGO), HPE Collaborate To Showcase U.3 Platform


Broadcom Inc. AVGO strengthened its partnership with Hewlett Packard Enterprise Company HPE in server storage. The companies will collaborate to demonstrate U.3 reference platform, SFF-TA-1001 at HPE Discover. The U.3 universal drive cage will feature Toshiba U.3 facilitated SAS, SATA and NVMe drives.

U.3 technology enables SSDs (SATA, SAS and NVMe) and HDDs (SATA and SAS) to function in a single bay. It renders the practice of wiring multiple protocols redundant, consequently simplifying the processes.

Broadcom remains committed in providing the customers with robust application uptime and data protection. The customers are likely to gain significantly from the new Broadcom enabled HPE server storage solutions. Lower costs, simplifying complexity, enhanced drive as well as storage flexibility and improved performance are the key benefits.

Notably, Broadcom’s 24-port RAID controller was also added to the HPE ProLiant Gen10 server family. HPE’s Smart Array P824i-p MR SAS controller furnishes an ideal solution for storage servers. The controller provides flexible, expander-less storage suitable for high drive count as in HPE ProLiant DL380 Gen10.

We believe Broadcom’s strengthening collaboration with HPE makes it well positioned to expand its data center server storage capabilities. We believe an expanding RAID portfolio bodes well for Broadcom in the long run.

Additionally, per a Technavio report, global RAID controller card market revenues are projected to reach $2.9 billion by 2021. This report reinforces our belief regarding the potential of the company’s RAID solutions.

Shares of Broadcom have returned 11.1% in the past year underperforming the industry’s rally of 14.4%.

Another Notable Development

Broadcom announced in another press release that it has developed the approved SFF-TA-1005 Universal Backplane Management (“UBM”) specification. The company developed the platform co-sponsored by HPE, Dell EMC and 19 other members. The platform will enhance simplicity and provide clarity to the management of SATA, SAS and NVMe drives.

Per the press release, “The SFF-TA-1005 UBM specification will help to unify and standardize backplane management in the data center.”

To Conclude

Broadcom is benefiting from robust demand of its wireless solutions and expanding product portfolio. It makes the company well-positioned to address the needs of rapidly growing technologies like IoT and 5G.

However, investors are cautious regarding the customer concentration woes and intensifying competition witnessed in most of the markets in which the company operates.

Zacks Rank & Key Picks

Broadcom currently carries a Zacks Rank #3 (Hold).

A couple of better-ranked stocks in the broader technology sector are Western Digital Corporation WDC and Micron Technology, Inc. MU, 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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