This Wireless Plunge Started in a New Place

The wireless technology world is upside down today. Shares of Skyworks Solutions (NASDAQ: SWKS  ) plunged 10.5% overnight. RF Micro Devices (NASDAQ: RFMD  ) dropped 11%. TriQuint Semiconductor (NASDAQ: TQNT  ) walked away with a smaller but still painful 5% haircut.

These wireless radio chip specialists usually plunge en masse when one of the major handset designers reports terrible sales. They also jump and drop in bunches when Apple (NASDAQ: AAPL  ) or Samsung replace one vendor's chip with another's in the next wave of guaranteed blockbuster phones.

But Apple didn't have a new iPhone or iPad ripped apart for analysis last night. Samsung's Galaxy S IV reveal is still a couple of weeks away, and the rumor mill isn't spilling a whole lot of beans on what to expect. None of these market-moving consumer product designers shared any sales numbers recently, nor are analysts weighing in with market estimates at the moment.

No, you can't blame this sectorwide panic on Cupertino or Seoul. The catalyst for these downward moves comes from a former ally.

Mobile chip giant Qualcomm  (NASDAQ: QCOM  ) just introduced a brand-new chipset that handles a plethora of wireless data standards, from aging 2G technologies to bleeding-edge 4G LTE. The product incorporates front-end signal processing, power management, and radio band tuning. Qualcomm's central processors have traditionally shipped with Skyworks and RF Micro modules to handle these tasks, which is why these stocks plunged faster than others on the news of Qualcomm taking control of many tasks.

So the next time Samsung goes looking for a complete radio solution, Qualcomm can pretty much do it all. Early guesses have indicated that a Qualcomm chip might power the next Galaxy, rather than Samsung's own chip designs you'll find in previous models. Qualcomm's new radio package is probably too new to make it into this particular product, but investors are looking a couple of generations down the road today.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 22, 2013, at 5:33 AM, monrio1 wrote:

    "To educate, amuse, and enrich?"

    I'd say the Fool failed on all three counts.

    Instead of piling on, adding nothing, and inciting panic, live up to your own motto.

    Read the analysts who came out in defense, learn the technology gaps Qcom faces, mention that the future Qcom offerings also will separate Qcom's core strengths allowing other partner suppliers to continue their core technologies which Qcom can't match.

    Maybe technology is not where the Fool should spend its in-depth analysis because the knowledge base obviously is not there, but apparently the willingness to dis-serve the technology investment community is.

    Power of the media in the hands of the Fool!

    Educate, amuse, and enrich? Live up to it.

  • Report this Comment On February 22, 2013, at 6:12 AM, taishiba wrote:

    LOL! Very funny. What an untrue article besides just reporting numbers...

    http://goo.gl/aBQ5x

    Feeney thinks the Qualcomm part is too generic to pose a real threat:

    "QCOM’s new front-end module (FEM) provides an off-the-shelf solution for OEMs, but the generic nature of this device—and a number of technology shortcomings—will be very likely to limit adoption. QCOM’s solution is based on all-silicon (SOI or SiGe) technology whereas leading-edge PAs are GaAs-based because that material provides superior performance, so we suspect this solution would be adopted only in lower-end smartphones. The FEM can only perform as well as its worst component – so handset OEMs which emphasize performance will likely steer clear of this one. Superior performance claims likely reflect QCOM’s baseband and the integration of envelope tracking (ET) technology—but others will have ET-PAs at the same time. Sub-par filter technology: QCOM is using SAW filter technology and this underperforms FBAR/BAW on certain bands – particularly LTE bands. Once again, this points to QCOM’s RF360 being targeted at lower-end devices. Uniformity for OEMs: QCOM’s solution removes the ability of OEMs to differentiate handsets. Handsets will end up having the same performance specifications. This would undermine the ability of the OEMs to segment its own customer base into high-spending customers and low, and would remove the ability to differentiate from competitors. No customization and no second source.

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