Qualcomm Buys Wilocity to Develop Innovative WiFi Products - Analyst Blog


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Qualcomm Inc. ( QCOM ), globally the largest chipset maker for mobile devices, has taken two significant steps to develop advanced WiFi chipsets utilizing the super fast 60GHz technology. Management stated that these two strategic decisions will completely overhaul the existing WiFi ecosystem for mobile, computing and networking devices. Qualcomm currently has a Zacks Rank #2 (Buy).

First, Qualcomm has taken over Wilocity Ltd., a leading Israeli developer of 60 GHz wireless chipsets based on IEEE 802.11 ad standard, popularly known as WiGig technology. Though WiGig is a much more close-range technology than WiFi, it utilizes a series of frequencies in the 60 GHz band to deliver multigigabit data transfer speeds. Although the financial terms of the deal have been kept under wraps, some industry sources rumored that the deal is valued at around $300 million.

Second, Qualcomm is in the process to develop a tri-band platform that will integrate its WiFi technology from the previously acquired Atheros Communications Inc. with the newly acquired WiGig solutions to significantly enhance the performance of wireless applications.

The tri-band reference design is based on Qualcomm's state-of-the-art Snapdragon 810 platform. The technology will enable 4K video streaming from the phone to the TV, peer-to-peer content sharing, networking, wireless docking, and instantaneous cloud access. The shipment of these products is expected to start next year.

The WiFi market has become a major growth driver for telecom operators and chipset developers. In Feb 2014, research firm WeFi Inc. reported that the number of commercial WiFi hotspots is expected to reach 10.55 million in 2018 in the U.S. while the amount of mobile data offloaded in WiFi networks had jumped a tremendous 875% in the U.S. in 2013.

In 2011, Qualcomm acquired Atheros in an attempt to enter the WiFi chipset market led by Broadcom Corp. ( BRCM ). This acquisition transformed Qualcomm into an integrated chipset developer for the mobile computing market and helped the company to foray into the consumer electronics segment, particularly in the home networking market. Atheros manufactures WiFi chips for TVs, video games, printers, and other home devices.

On the other hand, despite the presence of a strong competitor like Intel Corp. ( INTC ), Wilocity is the leading manufacturer of the 60 GHz wireless chipset designed to run on tri-band WiFi platform. Wilocity's chipset facilitates almost instantaneous transfer of huge media files between devices in a local area network.

In Jan 2014, Qualcomm acquired a portfolio of patents from Hewlett-Packard Co. ( HPQ ). The patent portfolio covers a wide range of technologies that include fundamental mobile operating system techniques to enable Qualcomm to aggressively expand into the global mobility market.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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