Marvell Technology Group Ltd.
) recently announced the launch of Yulong Coolpad's TD-LTE
China Mobile Limited
). The new smartphone is based on Marvell's ARMADA Mobile
solutions, which allowed Yulong to offer the device at a much
lower cost compared to its competitors such as
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ARMADA solution features Marvell's PXA1088LTE System-on-Chip,
which provides high performance at a much lower cost. The
deployment of this solution is expected to boost 4G LTE adoption
in China going forward.
Increasing adoption of smartphones in China presents significant
growth opportunity for Marvell in our view. According to China
Internet Network Information Center (CNNIC) report, the number of
Chinese mobile phone users, who surf net from their mobiles,
reached 464 million by the end of June 2013. This is an increase
of 43.79 million from the end of 2012.
According to IDC, in the second quarter of 2013, China's total
mobile phone shipments reached 110 million, of which smartphone
shipments were 86 million, up 10.0% on sequential basis.
The market-research firm expects China's smartphone shipments to
reach 360 million in 2013.
The issuance of 4G licenses and subsequent launch of iPhone 5S
and 5C on China Mobile's network are expected to increase
smartphone shipments to more than 450 million in 2014. Of this,
approximately 32 million smartphones will support China Mobile's
We believe that this presents a significant growth opportunity
for low cost providers such as Coolpad. According to IDC, Coolpad
was the third largest smartphone vendor in China at the end of
the second quarter. The launch of the new low-cost smartphone
supported by Marvell's solution is expected to boost its market
share going forward.
Increasing Coolpad shipments will boost Marvell's market share in
China going forward. Moreover, we believe that the expansion of
Marvell's broad 4G LTE portfolios would strengthen its position
in China. This is expected to act as a tailwind for the company's
near-term financial performance.
We remain positive on Marvell's diverse revenue model and stable
balance sheet. However, sluggish macroeconomic conditions coupled
with higher material costs, European exposure and intensifying
competition from the likes of
), are the near term headwinds.
Currently, Marvell has a Zacks Rank #2 (Buy).