Back to top

Analyst Blog

Maxim Integrated Products Inc. (MXIM - Analyst Report) has announced that its new power management chips are now being used in Samsung’s Galaxy® SIII mobile phone.

The Maxim chipset selected by Samsung comprises three-power management SoCs: one to power the quad-core Exynos 4412 application processor based on ARM Holdings (ARMH - Snapshot Report) architecture, the second to power the LTE baseband processor and the third for other power management functions such as battery charging and USB enhancements.

The new chipset is a big improvement from the previous generation product in terms of energy efficiency, USB enhancement and form factor. Therefore, management’s claim that the product enhances the SIII with respect to speed of charging, battery life and size may not be false.  

Samsung launched the SIII in May 2012 in London and by the end of May launched it in India, Europe and the Middle East. Its U.S. launch has been delayed slightly.

As per market research firm IDC, Samsung sold 44.5 million smartphones in the March 2012 quarter versus 35.1 million iPhones sold by Apple Inc. (AAPL - Analyst Report). Samsung thus managed to pick up 30.6% market share, racing ahead of Apple’s market share of 24.1%.

Statista, a statistical analytics website, forecasts that by the end of 2016 there will be 192.4 million smartphone users in the US. Alone. In addition, a study by IDC suggests that smartphone shipments will grow worldwide at a compounded annual growth rate (CAGR) of 18.6% until 2016.

Samsung has been launching newer and better versions of its smartphone models at frequent intervals, while withdrawing older models. The pace of new launches has therefore helped the company maintain consumer interest.

Maxim’s association with Samsung is a big positive, since Samsung has been using successive generations of its products. At the same time, we need to bear in mind that mobile phone life cycles are very short, so Maxim has to be on its toes to ensure that it doesn’t miss a design cycle. Given the stiff competition in the market from other analog companies like Intersil Corp (ISIL - Snapshot Report), Semtech Corp (SMTC - Snapshot Report), Texas Instruments (TXN - Analyst Report) and ON Semiconductor (ONNN - Analyst Report), the company could quickly lose a socket.

In the third quarter, Maxim reported revenue of $571.2 million, down 3.4% sequentially, 5.9% year over year and within management’s guidance range of $555.0-585.0 million. Revenue was down across all end-markets except industrial, which was flat sequentially.

Currently, both Maxim Integrated Products Inc. and Apple Inc. have Zacks Rank of #2, implying a short-term Buy recommendation.

Please login to Zacks.com or register to post a comment.