Qualcomm Leads Mobile Baseband Chipset Market

Zacks Equity Research
July 2, 2014

Qualcomm Inc. (QCOM) is clearly the undisputed leader in the global wireless baseband chipset market. According to a recent research report from Strategy Analytics, in the first quarter of 2014, Qualcomm dominated thise market with approximately 66% of revenue share, followed by 15% of MediatekInc. and 5% of Spreadtrum Communications. Other two major players in this field are Marvell Technology Group Ltd. (MRVL) and Intel Corp. (INTC).

Strategy Analytics cited Qualcomm’s success predominantly depends on its strong and diverse client base and a very powerful 4G LTE (Long-Term Evolution) product portfolio. Notably, Intel failed to appear in the first three ranked companies in the baseband chipset market for the first time in the last three years. However, both Intel and Marvell recently received significant LTE design-wins.

As a result, the global wireless baseband chipset market is likely to become intensely competitive. As per Strategy Analytics estimates, the size of the market had reached $4.7 billion in the first quarter of 2014, reflecting a year-over-year increase of 2.5%. Qualcomm currently has a Zacks Rank #2 (Buy).

Qualcomm benefits from the significant rise in demand for 3G and 4GLTE wireless technologies and smartphones in the emerging markets, particularly in China. Moreover, China’s decision to rollout the LTE technology isfurther drivingthe company’schip demand. Also, China Mobile Ltd. (CHL), the largest Chinese mobile operator, has decided to offer discounts on smartphones that will run on Qualcomm’s superfast 4G LTE (Long-Term Evolution) network.

China Mobile plans to offer five-mode LTE-enabled handsets. We expect Qualcomm to benefit considerably as the company boasts an extensive five-mode LTE chipset portfolio developed on its state-of-the-art baseband technology. The five-mode standard includes LTE, FDD-LTE, TD-SCDMA, WCDMA and GSM. Qualcomm currently has more than 255 royalty bearing licenses worldwide. Additionally, the company boasts over 90 single-mode OFDMA licenses.

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