Qualcomm launches smart speaker chip

Efforts by Qualcomm (QCOM) to diversify outside the smartphone market moved a notch higher recently. Last month, the company unveiled a new chipset and platform aimed at smart speaker makers.

Qualcomm’s goal with the new smart speaker chip and platform is to help developers build more powerful smart speaker devices and bring them to market quickly. By making it easier for companies to enter the smart speaker market, Qualcomm could see demand for its chips increase, resulting in more revenue for the chipmaker.

Qualcomm Doubles Down in $40 Billion Smart Speaker Market

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Smart speaker growing as smartphone market slows

The future of the smart speaker market looks bright. According to Grand View Research estimates, the global smart speaker market was valued at $2.2 billion in 2017. By the end of 2025, the smart speaker market is forecast to be worth $39.3 billion, implying that the market will expand at the rate of nearly 39% annually over the next seven or so years.

In contrast, growth in Qualcomm’s core smartphone market has slowed as smartphone penetration has nearly peaked in many major markets. According to a report from Gartner, global smartphone sales stalled in the fourth quarter of 2018, which ended in December.

Apple makes smart speakers

Apple, which recently resolved its differences with Qualcomm and committed to a multiyear chip purchase from Qualcomm, is also into the smart speaker business with a product called HomePod. The global smart speaker market is currently dominated by Amazon (AMZN) and Google (GOOGL), which held a 35.5% and 30% global market share, respectively, at the end of 2018.

Qualcomm’s revenue dropped 20% YoY to $4.8 billion in the December quarter as the company struggled with revenue loss due to its patent dispute with Apple and weakness in the smartphone market. Intel (INTC) and Advanced Micro Devices (AMD) recorded revenue growth of 9.4% and 6.0% YoY, respectively, in the December quarter.

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