QUALCOMM, Inc. (QCOM): New Processors and Health Opportunities to Stimulate Fresh Demand


QUALCOMM, Inc. (NASDAQ:QCOM) shares have lost nearly 30% from their one-year high price. That was primarily because of the fears expressed in some sections of media that the company was losing its importance in the chip market. Some of the smartphone makers, like Apple Inc. (NASDAQ:AAPL) or SAMSUNG ELECT LTD(F) (ADR) (OTCMKTS:SSNLF) and even Chinese Xiaomi, preferred to make the processors by themselves. That does not mean full requirements but part of them. That was no doubt a big blow to any chip maker. However, the company should be quick enough to respond to any eventuality. That is what the company is trying to do now to protect its interests. The company has not only introduced new processors but also entered a fresh area, i.e. health opportunities. That apart, there are also some other favorable events happening in favor to stimulate fresh interest on the stock. Let’s look at some of them.

Snapdragon Milestones

QUALCOMM, Inc. (NASDAQ:QCOM)’s subsidiary reached a milestone as far as Snapdragon 410, as well as 210 processors were concerned. For instance, its Snapdragon 410 processor is available in over 550 mobile device designs in the first year of its commercial launch. Incidentally, the process brought 64-bit computing power, as well as LTE connectivity to emerging markets. Secondly, the Snapdragon 410 processor has witnessed over 200 million units of shipment globally from over 60 OEMs.

Moreover, the Snapdragon 210 processor was added to over 200 designs. That included in the shipped, as well as in the pipeline devices. The processor was the first one for mobile to deliver 4G LTE connectivity in developing markets. Similarly, QUALCOMM, Inc. (NASDAQ:QCOM)’s Snapdragon 410 processor is the first commercial one for mobile to offer 64-bit computing to the below $150 pricing point. These milestones suggest that the company’s focus on the developing markets are paying dividends and demonstrated its position of leadership in several handset tiers in the smartphone sector. Some of the companies are going to launch new devices with Snapdragon 210 and 410 processors. That included Samsung Galaxy Mega2, Chinese Xiami Redmi 2, and Motorola Moto G. There are also other devices from different established phone makers like Huawei. The company also expects to add more devices in the upcoming months.

Global Pass Program

QUALCOMM, Inc. (NASDAQ:QCOM)’s global pass program cuts down the manufacturer’s upfront development costs of the device while accelerating the commercialization process of the device. The objective is to maximize the international potential of devices. Recently, its program got extended with America Movil to device commercialization of modern technologies, as well as certification. America Movil has started shifting several of its customers to 4G from 2G and 3G. The chip maker’s Global Pass will ensure that device makers create specialized LTE products which conform to America Movil’s regional specifications in an efficient, as well as affordable manner. As a result, the operator should work with OEMs and ODMs closely to bring an extensive, high-quality product offering to Latin America.

Also, the program aligns modem configurations, operator-specific needs, and device specifications into hardware, as well as software Qualcomm Reference Design offering along with Snapdragon processor.

Drone Processor Sector

QUALCOMM, Inc. (NASDAQ:QCOM)’s entry into the drone processor sector is an additional thing and will be a threat to its rival, Ambarella Inc (NASDAQ:AMBA). The company has already roped in Yuneec Electric Aviation as its first customer. It will deploy its Snapdragon Flight platform for drones. Interestingly, the China-based Youneec got Intel Corporation (NASDAQ:INTC) to invest in it. That would mean that the Chinese firm’s first preference should have been Intel’s x86 processors, as well as RealSense camera sensor technology. However, the development suggests that Youneec might have struck a deal with Qualcomm even before the Intel investments came in.

That is a shift from its procurement of drone processor from Ambarella (NASDAQ:AMBA). Not only Youneec but other rivals like DJI, which is the biggest vendor of commercial drones globally, also get their chips from Ambarella only. The action of the Chinese firm is very clear that it preferred to go with Snapdragon Flight rather than Ambarella A9 drone processors for its next year drone set-up. There is every chance that DJI can also follow Youneec in giving orders to QUALCOMM, Inc. (NASDAQ:QCOM). The confidence is because of the savings that drone makers will get from the all-in-one-chip Snapdragon Flight processor that can manage all flight control. That included video and photo recording apart from wireless communications. The American chip maker is helping to slash the average selling prices that can increase the demand for commercial/recreational drones.

Analyst Optimistic

Most recently, Argus said that it considered QUALCOMM, Inc. (NASDAQ:QCOM)’s new processors, as well as the product refinements extending the lead in the technology of mobile devices. Additionally, Qualcomm Life has bought Capsule Technologies. That will strengthen its connected health offerings to hospitals. That will finally establish a more flawless care continuum to home and every point in between from the hospital.

The brokerage considers Snapdragon Flight to be a high-end reference platform focused on the consumer drone market. Argus believes that it was important to maintain the lead in basebands and processors for long-term health. The recent Snapdragon processors strengthen the company’s middle-range lineup and the upcoming 820 chip is focused on the premium smartphone market. The brokerage has a price target of $80.

Conclusion

QUALCOMM, Inc. (NASDAQ:QCOM) appears to be sitting very well with a solid product profile. Commercial drones are gaining traction in the Americas. The milestones are achieved only if there is a solid demand. Therefore, the most recent fresh developments should really bring back the investors to the counter.

Disclaimer: The opinions and data expressed herein by the author are not an investment recommendation and are not meant to be relied upon in investment decisions. The author is not acting in an investment advisory capacity, nor is this an investment research report. The author’s opinions expressed herein address only select aspects of potential investment in securities of the company or companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that potential and existing investors conduct thorough investment research of their own, including detailed review of the companies’ SEC filings, and consult a qualified investment advisor. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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