Qualcomm (QCOM), the leading maker of smartphone chipsets, reported lower-than-expected sales for its second quarter as China’s emerging LTE market failed to create the demand Qualcomm had hoped for. Sales were $6.37 billion, up 4% year-on-year, and operating income was $1.99 billion, up 6% year-on-year.
LTE modems and licensing fees related to LTE patents will both be significant for Qualcomm in China. China Mobile, the world’s largest wireless carrier, recently said that all its 4G phones will have to support TD-LTE, FDD-LTE, TD-SCDMA, WCDMA and GSM. Qualcomm makes modems that support all five standards and should benefit from China Mobile’s LTE rollout, which is just getting started.
But as China Mobile works to build out its LTE network, Asian chipmakers are working to make components for the handsets that will operate on that network, and that is a big concern for Qualcomm. The company has already seen competition in the applications processor market from Taiwan’s MediaTek, and MediaTek is a force to be reckoned with in the modem market as well.
But Qualcomm is still very dominant in the market for LTE modems. It is also a leader in the market for integrated smartphone chipsets that include the modem and the applications processor on the same dye, saving precious real estate inside the smartphone.
Charts courtesy of Forward Concepts
