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Analyst Blog

As per a report by research firm Strategy Analytics, Qualcomm Inc. (QCOM - Free Report) has maintained its leadership position in the mobile chipset market. Although competition has intensified in the space with low-cost chip manufacturers like MediaTek and HiSilicon gaining traction in recent times, Qualcomm retained a 39% hold in the market in the first half of 2016. Notably, application processors power smartphone devices.

Competition Rife

Although Qualcomm has registered growth in shipments in the said period, its rivals are rapidly gaining traction. The most eminent threat comes from MediaTek, who has a worldwide share of 23% and is increasingly gaining popularity among smartphone manufacturers, courtesy of its low-cost and high-efficiency offerings. Moreover, strong sales of its iPhone products have lent Apple Inc. (AAPL - Free Report) a 15% share of the application processor market. Meanwhile, Qualcomm faces challenges from Samsung LSI as well as NVIDIA Corporation (NVDA - Free Report) and Intel Corporation (INTC - Free Report) . Moreover, due to the halting of production and sales of Samsung’s extremely popular Note 7, Qualcomm’s chipset shipments may take a hit in the remaining part of the year.

The Path Ahead

Though competition is intensifying, the prospects remain bright for Qualcomm. The company’s recent decision to outsource its next gen high-end Snapdragon 830 chipset to Samsung Electronics is a major positive considering Samsung’s brand value in the smartphone industry. Also, Qualcomm is actively involved in the production of chipsets for the 5G standard as well as various Internet of Things technologies which will propel growth in the future.

Qualcomm currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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