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Qualcomm Just Reshaped the Smartphone Industry

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Earlier this week Qualcomm (NASDAQ: QCOM  ) announced its new RF360 chip that allows OEMs to bring worldwide 4G LTE connectivity to all of their mobile devices. It's the first-ever chip of its kind, and it could change the way people buy smart devices.

A chip for the global world
Qualcomm's RF360 announcement isn't the typical release of a faster, smaller, more efficient chip -- it's a potential game changer. The chip supports 40 mobile bands worldwide and will work on all seven worldwide cellular frequencies. That means that any device that incorporates the new chip will work on LTE-FDD, LTE-TDD, WCDMA, EV-DO, CDMA 1x, TD-SCDMA and GSM/EDGE networks.

The RF360 chip means that any mobile device that uses the RF360 would be compatible, and theoretically available, on any network the same day a product is launched. So if Apple (NASDAQ: AAPL  ) wanted the next installment of the iPhone to be available on every U.S. and Chinese carrier when it launched, it could be. Consumers wouldn't have wait for their network version of the phone to be released. This is particularly important for Apple because it would mean the company could theoretically be on China Mobile's 4G network as early as mid-2013.

Worldwide gains
The RF360 could open up Qualcomm to even more mobile revenue than it already has. In 2012, Qualcomm's revenue increased by 32% and it grew profits by 25%. Qualcomm already sells processors, baseband chips, and other components to world's biggest OEMs, and the new chip allows Qualcomm to offer them something they've never had before.

Qualcomm is also releasing the new chip at just the right time. 4G networks are still new to many smartphone users and mobile traffic on these networks is expected to grow 40 times by 2017. With Qualcomm releasing to worldwide chip now, it'll potentially tap into 4G's future growth.

The right move
Even without Qualcomm's latest chip, the company is a leader in mobile processors and baseband chips and has a stronghold on 3G and 4G patents. Qualcomm is also sitting on about $26 billion in cash and investments. The new chip further solidifies Qualcomm as the leader in the mobile chip business, but don't expect its competitors to take this lying down.

Qualcomm's advantage is that it released its worldwide mobile chip first. Investors should look to see if mobile juggernauts like Apple and Samsung adapt the it into new versions of their phones. The company needs to get the new chip into as many devices as it can before other chip makers release a similar product. With new devices expected to have the RF360 by later this year, that shouldn't be a problem.

If Apple puts Qualcomm's RF360 into the iPhone, it could open up new possibilites for the Cupertino company's smartphone sales. Apple may be dominating the U.S. smartphone landscape, but there's lots of room for international growth. It's no secret Apple's stock isn't as strong as it was six months ago, and some even question whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

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9/28/2016 4:00 PM
QCOM $63.45 Up +0.14 +0.22%
Qualcomm CAPS Rating: ****
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CHL $62.13 Up +0.59 +0.96%
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