2024-03-28 11:34:24 ET
Summary
- Qualcomm Incorporated is a fabless chip designer that generates revenue from the mobile handset market through its leadership in CDMA Technology.
- Apple's potential to design its own modems for iPhones poses a material risk to Qualcomm's future earnings growth.
- However, Apple would likely still use Qualcomm IP, so some revenue would shift from the QCT segment to the QTL segment.
- Qualcomm's financials show strong revenue growth in the recent quarter, particularly in the QCT segment.
- The current rate of share buybacks makes Qualcomm's valuation compelling given modest growth expectations, total addressable market increases, and expected increases in ASPs of AI-enabled consumer electronics.
Business Overview
QUALCOMM Incorporated ( QCOM ) is a fabless chip designer that generates the bulk of its revenue from the mobile handset market. The company reports two primary business lines, Qualcomm CDMA Technology ("QCT") and Qualcomm Technology Licensing ("QTL").
QCT, as the name suggests, grew out of Qualcomm's historical innovation in CDMA technology. CDMA stands for Code Division Multiple Access, a technology that gives multiple users access to the same radio frequency band. This greatly increased bandwidth on cell networks when it was first commercialized and was presented as an alternative to the TDMA, time division multiple access, standard. The unit economics of CDMA were quite compelling for cell network providers, many of whom shifted to CDMA in the 1990s....
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Qualcomm: Whispers Of Value Amidst The Legendary Chip Bull Run