Qualcomm's 3 divisions are expected to make $21.61 billion for full-year 2020
(1) Mobile Chipsets $16.14 billion (75%)
(2) Licensing $5.1 billion (23%)
(3) Other Initiatives $370 million (2%)
Qualcomm's mobile chipsets division, which manufactures embedded chipsets used in mobile phones, laptops, and tablets, is expected to contribute $16.14 billion to total revenue in 2020, making up 75% of Qualcomm's $21.61 billion revenue estimate.The chipset division, is three times larger than the licensing revenue, which is expected to bring in $5.1 billion in 2020, making up 23% of total revenue.Qualcomm's chipset business will provide $3.75 billion, which is 93% of the $4 billion in total revenue that the company is expected to add between 2017 and 2021.This strong revenue growth has been key to Qualcomm's 40% price appreciation since December 2017, further helped by growing margins and an expansion in the PE multiple.Below we discuss Qualcomm's business model, followed by sections that review past performance and 2021 expectations for Qualcomm’s revenue drivers, including chipsets sold and price per chipset.
Qualcomm's Business Model
What Need Does It Serve?
Manufacturing chipsets for use in mobile phones and tablets: Qualcomm is a leading developer of Code Division Multiple Access (CDMA), a mobile device technology that facilitates communication between mobile devices and wireless towers.
It sells chipsets to mobile device manufacturers such as Apple, Samsung, Nokia, and Motorola Mobility; and charges a royalty to mobile manufacturers on every device sold that incorporates its technology.
Qualcomm also licenses its CDMA technology to other chipset manufacturers that wish to sell CDMA-based chipsets to mobile manufacturers.
Has 3 Operating Segments-
1. Mobile Device Chipsets: Offers integrated circuits embedded in mobile phones, laptops, tablets, and femtocells. They are used to provide voice modulation, Internet access, data storage, data-processing capabilities, and improve network coverage indoors.
2. Licensing: includes the royalties that Qualcomm charges on each handset sold based on its technology. Mobile device vendors make phones that utilize Qualcomm technologies and operate on networks based on these technologies.
3. Other Initiatives: includes revenues from the Qualcomm Strategic Initiatives reportable segment that makes strategic investments. It also includes revenues from non-reportable segments such as mobile health, data center, small cell and other wireless technology and service initiatives.
What Are The Alternatives?
Mobile Chipsets: Qualcomm competes with the likes of Mediatek, Intel and Infineon in the chipset segment.
What Is The Basis of Competition?
Clients care about how the chipset affects:internet access speedsbattery usagephone data capacitysignal strength
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