), a leading CDMA chipset maker, sits at the center of a trend we
see where traditional technology industry rivalries, such as AMD (
) vs. Intel (
) or AMD vs. nVidia (
), are being overshadowed by the growing rivalry between mobile vs.
In the mobile vs. PC debate, the main drivers to a company's
value are: 1) the size of the addressable market - or its "market
opportunity" (number of chips sold x average price), and 2) the
company's market share.
We believe that prospects look brighter for companies in the
mobile chipset business vs. those in the PC notebooks and desktop
businesses, and we forecast that if Qualcomm can grow its market
share to 75% from around 69% currently, this adds 11% to the
current Trefis price estimate of $48.12
Rising CDMA Penetration A Key
Qualcomm's mobile chipset business is worth $35 billion, which
is equal to 40% of Intel's notebook and desktop businesses combined
and greater than our estimated values of nVidia and AMD combined
- worth $6.7 and $5.6 billion respectively.
Rising penetration of phones using CDMA technology, largely
driven by emerging markets demand, is helping buoy Qualcomm's
business. Qualcomm currently makes CDMA and WCDMA chips for
cell phones competing with Texas Instruments (
), Infineon (PINK:IFFNY) and Broadcom (BRCM).
We expect the number of CDMA chips sold to increase from 1.3
billion in 2010 to 1.8 billion by 2016, a 38% increase, and for
pricing to stay relatively flat - from $16.30 to $15.30. This
represents a 30% growth in market opportunity from $21 billion to
nearly $28 billion.
CDMA Mobile Chipset Market Catches up to PC
The desktop business looks less attractive in the near term as
we expect chip sales to increase from 136 million in 2010 to 139
million and for average prices to drop from $79.70 to $56.80 - a
decrease in market opportunity of 27% from $10.8 billion to about
$8 billion by 2016.
For notebooks, we expect chip sales to increase from 177 million
to 260 million and average prices should drop sharply from $101 to
$81.50. This translates to a gain in market
opportunity from about $18 billion to $21 billion,
representing a healthy 18% climb but still smaller in market size
and growth rate than Qualcomm's mobile business.
This implies that the overall PC chipset market (desktops plus
notebooks) is expected to remain about flat at around $29 billion
over our forecast period while the mobile CDMA chipset market
catches up, reaching $28 billion by the end of our forecast
Upside from Higher Qualcomm Chipset Market Share
If we assume Qualcomm can achieve 75% market share by 2016,
similar to Intel's market share of PC chips, this adds 11% to the
current price estimate. This would be a slight reversal from
our current estimates and bring market share inline with 2007
levels. See our chart below.
To see our
complete Qualcomm price estimate click here