) recently announced its fiscal year earnings and highlighted that
the company will start commercial production of a multimode chipset
that will enable mobile phone users to transition from 3G to LTE
The 3G to LTE transition is underway globally with 156 operators
in 64 countries currently investing in this transition. In the US,
) is rolling out its LTE network and AT&T (
) plans to start its roll out in mid-2011. LTE networks
will offer faster data download speeds for mobile users.
We believe that the multimode chip can give Qualcomm an edge
versus competitors such as MediaTek, Texas Instruments (
), Broadcom (
), Marvell (MRVL), Freescale and Intel (INTC) which acquired
Infineon's wireless division.
We currently expect Qualcomm's CDMA market share to decline to
60% by 2016, but if it can maintain its current 69% with these new
chips, this adds around 7% upside to
our current price estimate of $49.93.
3G to LTE Transition Underway
LTE, which stands for Long Term Evolution, is the 4G technology
that will enable faster data transmission speeds to mobile devices.
Verizon, which is in the process of upgrading its network to LTE,
claims that the technology is capable of peak download speeds of 40
to 50 Mbps and peak upload speeds of 20 to 25 Mbps.
This transition is speeding up especially in developed markets.
According to Global mobile Suppliers Association (GSA), 113
operators in 46 countries have confirmed to deploy commercial LTE
systems, which is an increase of 49 operators in the past 6
In its recent conference call, Qualcomm mentioned that it
expects to see the first commercial chips by 2010
year-end. Since 3G is based primarily on CDMA technology,
the new multimode chipsets give Qualcomm an advantage. We believe
this can help Qualcomm maintain CDMA market share while it grows
with the LTE market.
Although we currently forecast that Qualcomm will continue to
lose share in the CDMA chipset market from 69% in 2009 to 60% by
2016, we could see 7% upside to the
$50 Trefis price estimate for Qualcomm
if it can sustain market share at 69%.
You can see the complete $49.93 Trefis Price
estimate for Qualcomm stock here