Qualcomm (Nasdaq: QCOM ) has its arms wide open for Microsoft's (Nasdaq: MSFT ) Windows operating system. The smartphone chip maker recently introduced its newest ARM-based Snapdragon S4 processor that can run Microsoft's newest version of its popular Windows operating system. The move alone may not be very significant, but it's definitely in the right direction. Here's why.
Spreading its wings
From my point of view, Qualcomm seems to be doing something that would go a long way in strengthening business even further by way of diversification. As you might know, Qualcomm already makes chips used in a wide range of Android-based devices. Nokia's (NYSE: NOK ) Windows-based Lumia range of smartphones also sports Qualcomm's Snapdragon processors. Even Apple's iPads and iPhones use Qualcomm's chips. Now with the S4 Snapdragon, Qualcomm can look forward to seeing its dual-core chips make their way to Windows-based tablets, which could do well with corporate customers. But that's not all.
As I mentioned in an earlier article, Qualcomm has a good presence in the market for 4G baseband modems with a 43% market share. The company also plans to make a significant dent in the Wi-Fi chip space with its first-of-its-kind 802.11ac chip that combines the functionality of Bluetooth Wi-Fi and FM radio.
But while Qualcomm might have introduced its S4 processor for Windows tablets, it's definitely not alone in the race.
A few speed bumps
Microsoft is also collaborating with other manufacturers of ARM-based processors, namely, Texas Instruments (Nasdaq: TXN ) and NVIDIA (Nasdaq: NVDA ) . However, given the fact that Qualcomm already enjoys a good deal of presence in the smartphone arena with its Snapdragon range of processors, it does stand a better chance against them.
Another spanner in the works might be in the form of problems with foundry partner TSMC (Taiwan Semiconductor Manufacturing Co.). The S4 chip in question is based on the 28-nanometer process with which TSMC is reportedly having problems. But these problems aren't restricted to Qualcomm. NVIDIA is also facing problems with TSMC in connection with the production of its Kepler chips.
The Foolish bottom line
Although Qualcomm does face some problems with its manufacturing partner TSMC, the company should see brighter days ahead driven by growing demand for smartphone and tablet devices on the whole. You can take a hint from the company's impressive 123% growth in second-quarter net income. With $15 billion in cash and investments on its balance sheet and just $1.1 billion in debt, I find Qualcomm to be a good bet in the smartphone and tablet space. Click here to add it to your watchlist.
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