Qualcomm supplies a number of chipsets for Samsung’s Galaxy S5 smartphone
In the previous part of this series, we discussed how Samsung’s (SSNLF) Galaxy S5 bill of materials (or BOM) is higher than other high-end smartphones, such as Apple’s (AAPL) iPhone 5S, and much higher than Google’s (GOOG) low-cost Android smartphones such as ZTE. However, Qualcomm (QCOM) stands to gain the most from the higher BOM for the Galaxy S5, as it supplies the most expensive chipsets, which go into the Galaxy S5. According to a report from Chipworks, Qualcomm has a number of chipsets inside the Galaxy S5, such as the Snapdragon 801 processor, the RF Receiver, the RF Transceiver, the Audio Codec, Power Management, and the Envelope Tracking Power Amplifier.
The Galaxy S5’s success will benefit Qualcomm immensely
As the chart above shows, Qualcomm’s revenue growth from its QCT or chipset business segment has slowed considerably. However, if the Galaxy S5 becomes a success, then Qualcomm will benefit immensely. According to a report from IHS Technology, the selling price of the Snapdragon 801 processor inside the Galaxy S5 itself is $41—which is quite large, considering that the average selling price of Qualcomm’s chipsets is around $22, as the company reports. In the prior article of this series, we discussed how Samsung, which is the largest smartphone player in the world, was able to sell 10% more Galaxy S5s than Galaxy S4s in the first month of the smartphones’ respective launches. This already makes the Galaxy S5 a success.
Snapdragon is one of the most important wireless chipsets in the family of chipsets that Qualcomm sells. It’s a mobile processor that provides advanced applications, graphics processing capabilities, and voice and data communication to mobile phones. In addition to the Galaxy S5, some of the other recent smartphones launched with Snapdragon included HTC’s (HTCKF) One M8 and Sony’s (SNE) Xperia Z2.
© 2013 Market Realist, Inc.
But if I knew how to manage my portfolio safer and smarter than most hedge fund managers, I could realistically grow my wealth.