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Qualcomm Mulls over Wilocity Takeover

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As per financial news website TheMaker, Qualcomm Incorporated (QCOM - Free Report) is in conversation with Israeli chip producer, Wilocity to acquire the latter for nearly $300 million. However, the two parties are yet to arrive at a mutual agreement regarding the terms and conditions pertaining to the sale.

Wilocity, which produces 60 GHz, 7 gigabit wireless chipsets, was founded in 2007 by former Intel Corp. (INTC - Free Report) employees. These chipsets allow users to download video and other contents from the Internet at high speeds. Dell is Wilocity’s first customer, with its computers using the latter’s chips. Wilocity also develops chips for mobile devices.

Qualcomm already holds investment in Welocity. The acquisition should thus further strengthen Qualcomm’s position in the chipset manufacturing market on the back of higher demand and help this San Diego-based company to safeguard its position against rivals like Intel, MediaTek Inc., NVIDIA Corporation (NVDA - Free Report) and Texas Instruments Inc. (TXN - Free Report) .

Last month, Qualcomm revealed that it has been working on the performance of its high-end Snapdragon processors. Smartphones integrated with the latest Snapdragon 808 and 810 processors are expected to be available from early 2015.

Modern processors such as Snapdragon 808 and 810 are aimed at providing download speeds of up to 300 megabits per second, high-definition images, 4K video recording support and ultra-high resolution playback. Both the chips are powered with 64-bit computing capacity.

Currently, Qualcomm carries a Zacks Rank #3 (Hold). We believe that the long-term fundamentals of Qualcomm remain intriguing given the steadily growing demand for 4G LTE-enabled mobile handsets in developed countries, rapid transition from 2G to 3G/4G in China and other emerging markets, and increasing licensing revenues. 

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