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We have a little conundrum on our hands, people.
Two weeks ago, radio-chip specialist Spreadtrum (Nasdaq: SPRD ) announced to the world that it enjoys a better than 50% market share in TD-SCDMA chips. That's a high-speed wireless networking technology developed specifically for the Chinese market, and used by the Middle Kingdom's largest network provider, China Mobile (NYSE: CHL ) . A dominant market share in that massive market would make Spreadtrum a no-brainer investment.
But then Marvell Technology (Nasdaq: MRVL ) comes along with some seemingly conflicting data. Marvell has "TD smartphone market share of over 70%," according to CEO Sehat Sutadja. "While we expect increased competition from followers in TD smartphones, we expect to maintain our leadership position and grow revenues next year."
Uh-oh. This sounds like two companies owning 120% of the TD market. Should we call one or the other a liar? What's going on here?
To me, it looks like a bit of gerrymandering gamesmanship from both Spreadtrum and Marvell. The companies don't seem to define the TD market exactly the same way -- Spreadtrum very specifically talks about 50% share in TD-SCDMA handsets while Marvell broadens the scope to everything TD. That includes the older TD-CDMA standard and also the upcoming TD-LTE technology. Slice these various flavors of market pie just so, and you might end up with more than a full pie between these two.
In any case, it's clear that TD-SCDMA is helping both companies. Marvell's TD sales helped drive 6% sequential growth in total revenue and $0.40 of non-GAAP earnings per share.
It's not all wine and roses for Marvell, though. The company is a huge player in controller chips for hard drives, and will suffer alongside major customers Western Digital (NYSE: WDC ) and Seagate Technologies (Nasdaq: STX ) as that industry recovers from flooding damage in Thailand.
We've also invested in another less-than-obvious play on the mobile market, seizing the opportunity as that company moves out of the aging computer systems industry and into "The Next Trillion-Dollar Revolution." There's a free report right here with your name on it, itching to explain the whole trillion-dollar market play in great detail.