Here’s One of Qualcomm’s Biggest Advantages

Qualcomm (NASDAQ: QCOM  ) is one of the world's leading semiconductor companies, and certainly the leading wireless chip company. As one of the few ARM (NASDAQ: ARMH  ) licensees that has been able to make good money participating in the mobile applications processor market, Qualcomm has continued to expand its moat in all things mobile silicon.

Qualcomm owns the entire platform
While some companies have been successful in investing in a handful of the subsystems found in a mobile processor, Qualcomm has invested heavily to have strong IP across the board. Further, not only are Qualcomm's individual building-blocks so robust, but its ability to integrate them together and to spin variant after variant for different market segments is a real competitive advantage.

Keep in mind, though, that it's not just about the apps processor. Qualcomm has far-and-away the best cellular technology (which is the heart of any mobile processor), and at the same time has been quite rapidly improving its connectivity solutions. Do note, though, that Broadcom (NASDAQ: BRCM  ) is widely acknowledged as the leader in high end stand-alone connectivity combo chips and will likely very vigorously defend its share there.

Qualcomm's Snapdragon 805 platform in all of its glory. Source: Qualcomm via AnandTech. 

As an added bonus, Qualcomm is also making a serious pass at owning the RF front end with its RF360 solution.

Illustrating the point

The Samsung Galaxy S5. Source: Samsung.

Let's examine a recent teardown of the newly released Samsung (NASDAQOTH: SSNLF  ) Galaxy S5 to illustrate this point. According to Chipworks, the Galaxy S5 sports the following Qualcomm chips:

  • WTR1625L RF transceiver
  • WTR1620 receive-only companion chip
  • PMC8974 power management IC
  • WCD9320 audio codec
  • QFE1100 envelope tracking power amplifier
  • Snapdragon 801 (MSM8974)

This is a lot of silicon content that goes well beyond simply winning the applications processor/baseband socket. One would be very hard pressed today to find a single chipmaker that could offer this entire package at these performance/feature levels today.

All of this enabled by large, focused R&D
While it's easy to point to the results, it's important to understand what drives these results. Qualcomm appears to spend in excess of $3 billion per year in mobile chip related R&D. Not too many other companies can afford this level of spending without a fairly near-term return, which is why the market ultimately cannot support more than a few competitors.

Regardless of which company ends up being the No. 2 to Qualcomm, it seems as though Qualcomm has solidified its spot as the leader in this space and has a wide and deep technological and economic moat to defend that position.

Want in on Apple's next big thing? 
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Read/Post Comments (0) | Recommend This Article (4)

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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3005295, ~/Articles/ArticleHandler.aspx, 9/21/2014 6:21:46 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement