Qualcomm to Support Windows 8

Qualcomm Inc.(QCOM - Analyst Report), the largest global manufacturer of mobile phone chipsets, is set to develop chipsets, which will support the upcoming Windows 8 platform. Earlier, in January this year, the company had planned to collaborate with other chipset makers to develop Microsoft Corporation’s (MSFT - Analyst Report) Windows 8 operating system.

Microsoft’s new version of the popular Windows platform will be supported by touch screen applications. The new feature is expected to counter the growing popularity of tablets, which are considered to be a real threat to the PC market. Microsoft also has a partnership with Qualcomm, under which Microsoft’s Windows Phone 7 is powered by Qualcomm’s chipsets. Moreover, Microsoft intends to extend its partnership with Qualcomm as most Android-based tablets typically use Qualcomm’s microprocessors.

Qualcomm’s microprocessors, popularly known as Snapdragon, are becoming more and more popular as demand for smartphones and tablets are increasing. These chipsets allow proper functioning of software on mobile handsets. Currently, 125 devices are using Qualcomm’s chipsets and another 250 devices are in the pipeline. Recently Nokia Corp. (NOK - Analyst Report) announced that it will be using Qualcomm’s chipsets in their upcoming Windows Phone 7-based smartphones.

Qualcomm also launched its next-generation Snapdragon processors supported by Krait architecture, which is generally used in Android-powered 3G smartphones. The new processor provides speed up to 2.5GHz per core coupled with lower power consumption, better graphics and video streaming facilities.

Recently, Qualcomm completed the acquisition of Wi-Fi chip set maker Atheros Communications, Inc. (ATHR), which will enable the company to diversify in the consumer electronics segment, particularly in the home networking market.

We maintain our long-term Outperform recommendation on Qualcomm. Currently, Qualcomm has a Zacks#2 Rank, implying a short-term Buy rating on the stock.