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Qualcomm Boosts 5G Network Connectivity With Snapdragon X60

Zacks Equity Research

Qualcomm Incorporated QCOM recently unveiled Snapdragon-backed third-generation 5G modem — X60. Upping its 5G chip dominance in the global market, the much-awaited launch is likely to boost network performance and provide flexibility to operators with optimized spectrum resources, in the face of universal migration from 4G to full-fledged 5G ecosystem.

The latest innovation in the Snapdragon 8 Series is specifically designed for top-notch 5G services with the help of sub-6 GHz spectrum and millimeter wave technology. Till now, the company has primarily been focused on developing premium category chipsets that reportedly delivered speeds of up to 7 gigabits per second with a more powerful X55 5G modem. These chips are mostly found in high-end smartphone devices.

Notably, Qualcomm aims to focus on carrier aggregation, which refers to a technique of combining two or more carriers into a unified data channel to enhance data throughput capacity. This will eventually prove to be a cost-effective option for carriers. This, in turn, will boost the average Internet speed on multiple devices by aggregating a plethora of wireless signals. With a flawless network coverage and capacity, it also results in power efficiency, which makes it all the more appealing to the gadget gizmos.

Qualcomm outsources its chip manufacturing facilities to companies like Samsung and Taiwan Semiconductor unlike Huawei, which manufactures its own set of chips. This makes Qualcomm chips more expensive and vulnerable to cut-throat competition in the global arena. Also, its average revenues declined in the last couple of years due to prolonged usage of smartphones. Despite these challenges, the San-Diego-based chip maker arguably remains the largest supplier of mobile phone chips in the world.

Per media reports, Samsung has secured the contract to manufacture the X60 chips with the first-of-its-kind 5-nanometer technology. Initially launched in 2019, these chips will be available in the markets in 2021.

Operating as a leading player in 5G, chipset market and mobile connectivity, Qualcomm focuses on three areas — computing, connectivity and electrification. With more than 150 5G design wins to date, it is reportedly the only chipset vendor with 5G system level solutions spanning sub-6, gigahertz and millimeter wave bands. The company aims to expand its product portfolio and develop mobile phone chips for the masses.

Qualcomm has long-term earnings growth expectation of 19.5%. The stock has rallied 67.8% compared with the industry’s growth of 18.5% in the past year.

Zacks Rank & Other Stocks to Consider

Qualcomm currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the broader industry are PCTEL, Inc. PCTI, Perion Network Ltd. PERI and Motorola Solutions, Inc. MSI. While PCTEL and Perion sport a Zacks Rank #1 (Strong Buy), Motorola has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

PCTEL exceeded estimates in each of the trailing four quarters, the positive earnings surprise being 150.6%, on average.

Perion exceeded estimates in each of the trailing four quarters, the positive earnings surprise being 87.9%, on average.

Motorola exceeded estimates in each of the trailing four quarters, the positive earnings surprise being 6.6%, on average.

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