Smartphone Revolution: Buy These Tech Stocks

4k resolution is coming to smartphones. Do you know how to profit from it?

Mar 31, 2014 at 3:00PM

It seems high-resolution displays won't be limited to just LED TVs. NPD DisplaySearch estimates that 1080p, 2k and 4k resolution displays, collectively, will be equipped in about 55% of total smartphones shipped in 2017 -- a sharp increase from 30% in 2013. Fortunately for investors, there are ways to profit from this exponential growth. 

Video playback requires a processor to access data bits from volatile memory, encode it, and present it in visual form on a digital display. With higher resolutions, more data bits need to be processed simultaneously. Essentially, this means that 4k, 2k, and 1080p content playback require fast system-on-chips.

Qualcomm (NASDAQ:QCOM) is currently the leading system-on-chip manufacturer, commanding a global market share of 64%. Its Snapdragon processors are equipped in a wide range of smartphones and tablets; smartphone processor sales account for 43% of its overall revenue. 

Qualcomm unveiled its latest, Snapdragon 805, earlier this year. The chip houses an Adreno 420 GPU with four Krait 450 processors, which allow it to output content at 4k resolution. In fact, the chip is being used to power the world's first 10-inch tablets running at 4k UHD resolution. 

With a gigantic market share, huge exposure to the smartphone industry, and product deployment already under way, Qualcomm stands to benefit immensely from improving smartphone displays.

DRAM modules
Computing processors access media content from non-volatile memory and store it in volatile memory for speedy encoding. Therefore, flawless 4k and 1080p media playback requires a fast DRAM memory as well. For this reason, Micron (NASDAQ:MU) stands to benefit greatly.

Micron is the third largest mobile DRAM manufacturer, commanding a 23% global market share. For fluidic user experience, the company currently offers LPDDR3 modules -- about 60% faster than LPDDR2 memory. These chips are deployed in high-performance mobile devices like Apple's iPhone 5s and Samsung's Galaxy S4. 


4k Video Playback

1080p Video Playback

Peak Bandwidth reqd.



Source: JEDEC

The pure-play memory manufacturer is also sampling its LPDDR4 memory. Compared to equivalent LPDDR3 modules, these chips are about 50% faster and consume 40% less electricity. More importantly, these next-gen modules have the required bandwidth to play 4k media content -- illustrated in the table below. 




Peak Bandwidth offered

25.6 GB/s

15 GB/s

Source: JEDEC

Micron already has an established market position. With this critical launch, therefore, the company will be able to benefit from improving smartphone display resolutions.

Display panels
Universal Display (NASDAQ:OLED) is another beneficiary here. It is the leading manufacturer of OLED panels, designed exclusively for smartphones, tablets, and TVs. Its revenue stream is largely comprised of OLED smartphone panel sales; revenue from Samsung Display represented 68% of Universal Display's overall revenue in fiscal year 2012. 

The OLED manufacturer's trailing-twelve month revenue currently aggregates to $146.6 million. This number, however, can grow exponentially over the coming years. 

Higher-resolution screens magnify content detail, and the lack of proper color vibrancy results in a dull user experience. Therefore, smartphone manufacturers may feel compelled to ditch generic display panels and adopt OLED panels, offering a wide gamut of colors and contrast range.

Market research firm DisplaySearch agrees. The firm estimates that OLED panels will be equipped in 40% of total smartphones shipped in 2018 -- an exponential increase from 0.2% in 2013. Between 2013-2015, the research firm expects the market to grow six-fold. 

With valuable clients like Samsung, Universal Display won't have to scout for willing buyers to capture this expected growth. With a pure-play business model, the OLED manufacturer can deliver exceptional returns over the coming years.

Foolish final thoughts
All the mentioned companies are established leaders in their respective industries. Therefore, investors might want to consider investing in all of them to diversify their rewards, and reduce the risks of volatility.

Are you ready for this $14.4 trillion revolution?
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.

Piyush Arora has no position in any stocks mentioned. The Motley Fool recommends Universal Display. The Motley Fool owns shares of Qualcomm and Universal Display. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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