Chipmaker Qualcomm is poised to continue reaping the benefits of increased Google Android smartphone adoption, while also being well positioned for additional opportunities to power future Apple iPhones, including a CDMA version for Verizon Wireless in the U.S. Qualcomm’s relatively rosy outlook is the focus of two separate analyst reports: Mark Sue from RBC Capital Markets and Ashok Kumar of Rodman & Renshaw each penned their own research notes on Qualcomm today.
This year, Qualcomm has practically owned the blossoming Android device market: while Samsung and Texas Instruments power a few handsets such as the Samsung Galaxy S and Motorola Droid X, nearly all of HTC’s Android phones use Qualcomm’s MSM line of chips for processing and connectivity. HTC currently builds the widest range Android handsets compared to any other manufacturer and if the company hits sales targets, it will follow behind Nokia and Samsung as the no. 3 original equipment maker in the world of phones in terms of yearly sales.
Such reliance on Qualcomm’s MSM chipsets for Android phones is helping to drive Qualcomm sales forward: Sue estimates that in the September-starting quarter alone, the company will have shipped 112 million MSM chipsets. Kumar concurs with an estimate range of 110m to 115m and believes that manufacturing a CDMA iPhone in December could begin to add 10 million more chip sales each quarter for Qualcomm by mid-2011. And if by chance, someone else’s chips power a CDMA iPhone, as the holder of key CMDA patents, Qualcomm would still earn royalties on every CDMA iPhone sold.
Past successes don’t always equate to continued success in the future, however. Kumar suggests that a while a CDMA Verizon iPhone is likely to use Qualcomm chips, the playing field for an iPhone for LTE networks of the near future is wide open. Baseband and system chipsets from ST-Ericsson and Intel will challenge Qualcomm in a next-generation iPhone, says Kumar. Winning the chip contact for one phone from one manufacturer may not sound like much, but Qualcomm and its competitors would likely be thrilled to power an LTE iPhone in the coming years. After all, Apple now sells more handsets globally than Research in Motion and Sony-Ericsson.
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