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Qualcomm (QCOM) to Supply 5G Modem Chips for Upcoming iPhones
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QUALCOMM Incorporated (QCOM - Free Report) recently entered into a multi-year agreement with Apple Inc. (AAPL - Free Report) for an undisclosed amount to supply Snapdragon 5G Modem-RF systems for upcoming iPhone models. The specific valuation of the agreement, which is set to remain in effect until 2026, remains confidential. It highlights Qualcomm’s robust portfolio and its leadership position across 5G technologies and products.
Apple had earlier given a strong indication of moving toward developing in-house technology and its acquisition of Intel’s modem business for $1 billion was a step forward in that direction. However, the volte-face portends that the chipmaker is perhaps not ready with its in-house production, forcing it to turn to its trusted supplier for the upcoming iPhone models.
Moreover, Beijing is reportedly mulling to impose a ban on the use of iPhones in government offices and state-backed entities as part of its concerted effort toward self-reliance. Consequently, Apple is perhaps leaning toward its tried and tested model to tide over these challenging times, as China is one of its primary markets. The deal with Qualcomm has ensured a steady supply chain for 5G chips for the next three years.
In addition to incremental revenues, the deal augments QCOM's leadership position across 5G technologies and products. The deal also gains significance as the chipmaker was expected to record softer revenues from China owing to strict restrictions of iPhone usage. However, the recent deal with Apple has largely negated this concern and has reposed investors' faith in the stock.
Qualcomm's long-term financial planning assumes a 20% share of the chipset supply for smartphone launches in 2026. In the face of rising competition from other well-established players and the prevailing business uncertainties, the deal will likely provide a substantial competitive advantage for Qualcomm and enhance its prospects.
Qualcomm is one of the largest manufacturers of wireless chipsets based on baseband technology. The company is focusing on retaining its leadership in 5G, chipset market and mobile connectivity with several technological achievements and innovative product launches. It is likely to help users experience a seamless transition to super-fast 5G networks, delivering low-power resilient multi-gigabit connectivity with unprecedented range and Qualcomm's best-in-class security. This, in turn, would further offer the flexibility and scalability needed for broad and fast 5G adoption through accelerated commercialization by OEMs.
Qualcomm is reportedly the only chipset vendor with 5G system-level solutions spanning both sub-6 and millimeter wave bands and one of the largest RF (radio frequency) front-end suppliers with design wins across all premium-tier smartphone customers. With the rollout of 5G technology, it is benefiting from investments toward building a licensing program in mobile. The company is well-positioned to meet its long-term revenue targets, driven by solid 5G traction, greater visibility and a diversified revenue stream.
Shares of the company have lost 11.7% in the past year compared with the industry’s decline of 13.1%.
Image Source: Zacks Investment Research
Qualcomm currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Motorola Solutions, Inc. (MSI - Free Report) , carrying a Zacks Rank #2 (Buy) at present, delivered an earnings surprise of 5.62%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 5.58%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
It provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure service providers. It develops and services both analog and digital two-way radio, voice and data communications products and systems for private networks, wireless broadband systems and end-to-end enterprise mobility solutions to a wide range of enterprise markets.
Splunk Inc. , currently sporting a Zacks Rank #1, delivered an earnings surprise of 154.90%, on average, in the trailing four quarters. In the last reported quarter, it delivered an earnings surprise of 69.05%.
Splunk provides software solutions that enable enterprises to gain real-time operational intelligence by harnessing the value of their data. The company's offerings enable users to investigate, monitor, analyze and act on machine data and big data, irrespective of format or source, and help in operational decision-making.
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Qualcomm (QCOM) to Supply 5G Modem Chips for Upcoming iPhones
QUALCOMM Incorporated (QCOM - Free Report) recently entered into a multi-year agreement with Apple Inc. (AAPL - Free Report) for an undisclosed amount to supply Snapdragon 5G Modem-RF systems for upcoming iPhone models. The specific valuation of the agreement, which is set to remain in effect until 2026, remains confidential. It highlights Qualcomm’s robust portfolio and its leadership position across 5G technologies and products.
Apple had earlier given a strong indication of moving toward developing in-house technology and its acquisition of Intel’s modem business for $1 billion was a step forward in that direction. However, the volte-face portends that the chipmaker is perhaps not ready with its in-house production, forcing it to turn to its trusted supplier for the upcoming iPhone models.
Moreover, Beijing is reportedly mulling to impose a ban on the use of iPhones in government offices and state-backed entities as part of its concerted effort toward self-reliance. Consequently, Apple is perhaps leaning toward its tried and tested model to tide over these challenging times, as China is one of its primary markets. The deal with Qualcomm has ensured a steady supply chain for 5G chips for the next three years.
In addition to incremental revenues, the deal augments QCOM's leadership position across 5G technologies and products. The deal also gains significance as the chipmaker was expected to record softer revenues from China owing to strict restrictions of iPhone usage. However, the recent deal with Apple has largely negated this concern and has reposed investors' faith in the stock.
Qualcomm's long-term financial planning assumes a 20% share of the chipset supply for smartphone launches in 2026. In the face of rising competition from other well-established players and the prevailing business uncertainties, the deal will likely provide a substantial competitive advantage for Qualcomm and enhance its prospects.
Qualcomm is one of the largest manufacturers of wireless chipsets based on baseband technology. The company is focusing on retaining its leadership in 5G, chipset market and mobile connectivity with several technological achievements and innovative product launches. It is likely to help users experience a seamless transition to super-fast 5G networks, delivering low-power resilient multi-gigabit connectivity with unprecedented range and Qualcomm's best-in-class security. This, in turn, would further offer the flexibility and scalability needed for broad and fast 5G adoption through accelerated commercialization by OEMs.
Qualcomm is reportedly the only chipset vendor with 5G system-level solutions spanning both sub-6 and millimeter wave bands and one of the largest RF (radio frequency) front-end suppliers with design wins across all premium-tier smartphone customers. With the rollout of 5G technology, it is benefiting from investments toward building a licensing program in mobile. The company is well-positioned to meet its long-term revenue targets, driven by solid 5G traction, greater visibility and a diversified revenue stream.
Shares of the company have lost 11.7% in the past year compared with the industry’s decline of 13.1%.
Image Source: Zacks Investment Research
Qualcomm currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Motorola Solutions, Inc. (MSI - Free Report) , carrying a Zacks Rank #2 (Buy) at present, delivered an earnings surprise of 5.62%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 5.58%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
It provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure service providers. It develops and services both analog and digital two-way radio, voice and data communications products and systems for private networks, wireless broadband systems and end-to-end enterprise mobility solutions to a wide range of enterprise markets.
Splunk Inc. , currently sporting a Zacks Rank #1, delivered an earnings surprise of 154.90%, on average, in the trailing four quarters. In the last reported quarter, it delivered an earnings surprise of 69.05%.
Splunk provides software solutions that enable enterprises to gain real-time operational intelligence by harnessing the value of their data. The company's offerings enable users to investigate, monitor, analyze and act on machine data and big data, irrespective of format or source, and help in operational decision-making.