), one of the leading manufacturers of smartphone chipsets, has
entered into a long-term contract with Semp Toshiba to offer
royalty-bearing patent license to develop, manufacture and sell 3G
WCDMA and TD-SCDMA, and 4G OFDMA (e.g., LTE) subscriber units. Semp
Toshiba is one of the leading electronics device manufacturers in
Higher adoption of smartphones and tablets coupled with
increased rollouts of 3G/4G networks have led to increased demand
for LTE capable processors. So in order to tap such existing
opportunity, Qualcomm is continuously accelerating its chipset
Moreover, such contract wins from emerging countries like Brazil
(world's fifth largest populated country) will create huge growth
opportunity for the company while moving ahead. Alongside, the
country has already auctioned 4G licenses (sold 54 airwaves out of
269 airwaves) and also has plans as per Anatel (Brazil's
telecommunications regulator) to launch its 4G LTE services across
the nation by the end of next year.
We believe that the company's record-high earnings, strong
balance sheet and huge demand for S4 chipsets will act as positive
catalysts for the stock going forward. Moreover, the growing
popularity of smartphones and tablets coupled with increased
deployment of 3G/4G networks and the recent launch of 4G LTE-based
iPhone 5 by
) will further drive the stock upward.
However, stiff competition from formidable rivals like
) coupled with supply constrain arising out of huge demand for
Snapdragon S4 processors mainly used in 4G LTE-based smartphones
may act as headwinds for the company going forward.
We maintain our long-term Neutral recommendation for Qualcomm
Inc. Currently, it has a Zacks #2 Rank, implying a short-term Buy
rating on the stock.
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