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Ambarella Whisper

Ambarella Whisper
 

Research Question: Will Ambarella’s drone and automotive camera business segments continue to drive its skyrocketing growth?

Report Available: August 19, 2015

 

Blueshift’s initial research shows AMBA’s system on chip (SoC) technology is a necessary component for many of its end markets, including high growth areas such as body cameras, action cameras, HD security cameras, police cams, vehicle cams, and drones. However, some doubt whether enough early adopters will buy into 4K video technology, an area where AMBA hopes to make its “bread and butter,” and question whether its reliance on a single client like GPRO is too risky.

 

Observations

  1. AMBA earns 35% of its revenue from GPRO and 40% from its IP security camera segment (althoughhigh-end growth in the IP cam market is slowing.) AMBA’s drone segment is still quite small but holds great potential: One Wall Street firm believes the drone market will drive AMBA’s drone revenue from $6 million to $50 million by 2017. AMBA’s newest 4K SoCs are available across segments, but 4K necessity is intensely debated. Most 4K proponents argue that 4K displays are much sharper and even without a 4K display, a4K recording compressed into 1080p yields better color than recording in 1080p. In addition to GPRO, AMBA supplies SoCs to lower-end action camera competitors Xiamoi and SJCAM.
  2. AMBA has placed large bets on its 4KSoCs, however the full benefits of 4K video cannot be fully realized unless displayed on a 4K screen (a $500 to $3,000+ expense depending on size.) Very few of today’s households have adopted 4K displays or are willing to do so until the price drops and more 4K content becomes available. Storing 4K footage requires a massive amount of hard drive space; one digital film maker claims a two-hour movie shot in 4K playing at 30 frames per second would require 55TB of storage. 4K video also needs a 1Gbps path for continual playback, requiring very fast hard drives and network connections.
  3. Blueshift’sJune 2015 Trends Tracker found interest in drones slowly picking up, which should benefit GPRO and chipmaker AMBA. 4.2% of respondents own or use a drone, a 1.2 percentage-point increase compared with the previous quarter. Drone ownership and use increased among respondents under 60, particularly those age 30 to 44.

 

Will AMBA continues to grow at an astonishing pace as drone and 4K video adoption pick up? Or will it remain a niche player? To gain insight into this AMBA, Blueshift will gather data and issue a market research report from independent sources in the following areas: Action camera companies, SoC for camera companies, Drone manufacturers, 4K video experts, Vehicle camera producers, IP security camera producers, and Industry specialists.

 

Companies: Ambarella (AMBA), GoPro (GPRO), Broadcom (BRCM), NVIDIA (NVDA), Intel (INTC), Qualcomm (QCOM), Samsung Electronics (KRX: 005930), Fujitsu Limited (FJTSY), Novatek Microelectronics (3034.TW), Sunplus Technology (2401.TW), Panasonic Corporation (PCRFY), AXIS AB (STO: AXIS), Texas Instruments (TXN)