Qualcomm Might Lose Apple At Its Customer

 The world's largest chipmaker may lose potential business once the tech giant transition to rival chipmaker

Qualcomm Inc. shares have been tumbling at the stock market post the rumors that the world’s most valuable company, Apple Inc. is transitioning to some other supplier for getting the component that connects the iPhone to the Internet.

On Wednesday, the San Diego, Calif. firm reported its better than expected earnings –and EPS of $1.04 per share on a revenue of $5.54 billion. However the shares went down 2.5% when the company announced that it might suffer a potential business loss as the company’s prestigious client is considering entering into a contract with the rival.

Several analysts have speculated that the major client which Qualcomm is talking about is the Silicon Valley tech giant, Apple Inc. as according to Bloomberg, the world’s largest chipmaker has only two major clients; Apple and Samsung and since Samsung already has multiple suppliers therefore only Apple is left to have taken the decision of moving to another supplier.

Any switch which the tech giant made regarding the components used in the devices is likely to shake the industry. The chipmaker’s stock slumped down in after-hours trading after the CEO Steve Mollenkopf predicted the likely business loss. Cowen & Co.’s analyst Tim Arcuri along woth other analysts have projected that the Apple may be collaborating with Intel Corporation for the modem chips installed inside the iPhones.

The stock fell down to $50.80. Through Wednesday, however, the shares were up by almost 4.2%.

The CEO forecasted about the likely business loss however he did emphasize in front of analysts and the investors that the chipmaker has the potential of delivering high level profits even though the company’s customers may opt for rival suppliers.

But, the CEO couldn’t fully reassured the investors. Fund manager for Becker Capital Management –owner of Qualcomm stock –Sid Parakh said: “We think there is an element of investor expectation that they lose some business at Apple.”

A spokesman from Qualcomm stated that the company doesn’t intend to give any further insight into the matter except for what it has already told on the conference call. Moreover, Cupertino, Calif. firm didn’t comment on the matter when asked.

Several mobile phones maker generally make use of modem and processor which are usually manufactured by Qualcomm but the tech giant although does use third party manufactured modems which are the microchips used to ensure the connection of the phone to cellular networks but designs its own processors.

In other news, Apple Inc. stock has also entered bear market as the Qualcomm’s another announcement of decline in chips shipments has made the analysts to bring down their estimates of the iPhone sales.

Qualcomm Inc's Good Days Have Finally Arrived

The chipmaker was named the biggest winner at the MWC which shows that 2016 is going to be a good year for the tech giant.

After going through a rough patch in 2015, there has been a turn of events for Qualcomm Inc.

In the previous year, the chipmaker’s flagship processor Snapdragon 810 failed to prove itself in the market and therefore could not make a significant difference during the year. However, the turn of events suggest that at the Mobile World Congress (MWC) it was the biggest winner due to its new Snapdragon 820 processor.

As stated by the company, the chipmaker’s Snapdragon 820 processor will be present in most of the smartphones in the market this year. The flagship product’s version that the company launched in 2015 failed miserably as it was reported to have heat and power issues and because of that the chip manufacturer even lost its deal with the Korean giant, Samsung Electronics Ltd. The Korean Giant was Qualcomm’s biggest customer in the market who after the failure of the processor decided to power its devices with its own internal processor, Exynos.

Samsung leaving had a major effect on Qualcomm’s stock as it plunged significantly and this decline cost the company’s reputation as well. However, as per recent news, the Korean technology organization is back on board with the chipmaker along with a number of other smartphone makers including Sony, HP, LG and Xiaomi. All the smartphones from the above mentioned companies will have the Snapdragon 820 processors in them.

The latest processor is expected to provide twice as better performance in comparison to the previous one. The device is a quad-core and not an octa-core however the company has informed that this will not make much of difference and will not compromise the performance of the smartphones. Additionally, it will have a aptx HD feature with the help of which 24-bit music playback can be done along with wireless headphones.

Furthermore, Qualcomm’s chips will be featured in Samsung Electronics latest Galaxy smartphone including Galaxy S7, S7 Edge along with LG’s modular G5 smartphone and in three of Sony’s smartphones. The company got a lot of appreciation and praise from the cellphone makers at the Mobile World Congress.

And this month the chipmaker also announced that it will be working on three new chips which includes Snapdragon 425,435 and 625 – these chips are said target a number of difference market segments. Additionally, the chipmaker also announced and introduced its Wearable Platform’s Snapdragon Wear 2100 chip. This segment works on producing chips that will be incorporated in wearable gadgets such as smartwatches and activity trackers.

Even though it ca be observed that the smartphone market has almost reached its saturated market, the chip manufacturing organization has proved that it is still the best and the preferred chipmaker in the industry as most of such technology companies wants their phone to be powered with Qualcomm’s chips. The decline in the demand in the phone market has caused the sales of a number of tech businesses to drop but Qualcomm is growing with the growing market and is likely to be present in other such smart devices including drones, laptops, etc.

Qualcomm, Inc. Decides to Advance Into The Chinese Market

The chipmaker has had a tough year and plans to enter China

In the most recent quarter, the earnings of Qualcomm, Inc. fell by 24%. This fall in the earnings makes it evident that the low-demand of the smartphone is not just affecting Apple Inc. and other smartphone makers but also the component suppliers. The San Diego based chip maker has shared its expectations for the second quarter of fiscal year 2016 and expects the sales and profit to fall short of analyst’s estimations.

According to the calculations of the chip-maker, the revenue for the quarter that ends on March is likely to be somewhere between $4.9 billion to $5.7 billion while the earnings could be between 69 cents to 79 cents per share. As per the compilation by analysts at Bloomberg, the earnings could be of 84 cents on sales of approximately $5.66 billion.

The most revenue of the company comes from its division that makes processors and modems for smartphones. This division is likely to face a hit as the market is slowing down; additionally other chip makers who are rivals of Qualcomm are coming out with better prices and better performing chips. Also because of low-demand for smartphone, technology giants including Apple Inc., Samsung Electronics and Huawei technologies prefer to make their own components now.

An analyst at Sanford C. Bernstein, Stacy Rasgon stated that the market is saturating and the competition in the market is worsening, he added the company’s issues are mainly structural and are not going away anytime soon. Currently, Stacy has given a Hold rating to the stock of the chip manufacturing giant.

After the earnings report surfaced, Qualcomm stock fell by 2% and was being traded at $47.53 per share – this decline in the share price brought the total decline to 34% throughout out the year. Subsequently, Steve Mollenkopf, the chief executive officer of the company stated that the smartphone market is growing but the major players in the market are facing trouble which includes Samsung and Apple. He added that due to the market saturation, many of the organization’s customers are facing trouble in growing.

For example: Apple Inc. for the first time reported the slow growth in iPhone’s sales ever since it launched back in 2007 – and the report also suggested that for the upcoming quarter the sales might even see the first ever decline.

The CEO of Qualcomm is trying his best to make its technology available in other areas of the market including cars, serves and medical devices. 

On the other hand, the year did not entirely end on a bad note as it also announced its plans of advancing in the world largest country, China. According to the announcement of the company, it will work on a joint venture with the regional government of Guizhou China which, according to the deal, will work on the production of chips. This new joint venture will be known as Guizhou Huaxintong Semi-Conductor Technology Co.