Should You Be Betting on Qualcomm's Turnaround?

The last few months have been troublesome for chipmaker Qualcomm (QCOM). The company has struggled to grow its business and losing spots in Samsung’s flagship devices didn’t help the company’s cause. Despite the struggles, I think Qualcomm can turn around this year.

2015 was not a good year for Qualcomm as the stock was down around 23.5 percent. However, 2016 appears to be completely different as the stock is up almost 6% year to date. Qualcomm was badly hurt previous year, when Samsung kicked it from its flagship smartphone Galaxy S6 and Galaxy S6 Edge.
The company lost its huge market share mainly due to the replacement of Snapdragon processor with Samsung Exynos 7 Octa 7420 in Samsung Galaxy S6.

Samsung holds a large portion of market share in the smartphone segment, therefore it is very clear that Samsung can be a threat to the company, but within a limit. It is not likely that Samsung can steal a large portion of market share in the smartphone market instantaneously from Qualcomm. The reason behind is that, according to the Mobile World Congress (MWC) 2016, it was detailed that Qualcomm’s Snapdragon 820 chipset will be used in Samsung’s upcoming smartphones, Galaxy S7 as well as Galaxy S7 Edge, at least in the U.S. This clearly signifies that even Samsung is not confident regarding its Exynos line of chipsets for now.

Moreover, apart from Samsung’s smartphones, the company’s Snapdragon 820 will also power other handsets of several companies, like HTC, Sony, LG, Xiaomi, and HP. Snapdragon 820 will be used in HP’s Elite x3 featuring Windows 10.

On the other hand, it is imprudent to believe that Samsung cannot compete against Qualcomm. In spite of good opulence of Snapdragon 820, Exynos could arise as a dominant rival. However, Qualcomm’s Snapdragon 810 was the worst product of the company mainly due to overheating and power issues, which resulted in loss of market share. But, Qualcomm has worked hard in designing Snapdragon 820 and has fixed all the problems found in Snapdragon 810.

Contrary to Qualcomm, Samsung does not have any expertise in developing a custom-built CPU core. It is remarkable that Kryo supports virtual reality, advanced imaging and computer vision. Therefore, Samsung has decided to give a slot to Snapdragon 820 in its approaching handsets Galaxy S7 and S7 Edge smartphones selectively.

Regaining its spot in the Galaxy S7 and S7 Edge can help Qualcomm gain momentum. The company’s worst days are behind it and Kryo can drive its turnaround this year.
Published on Mar 4, 2016
By Akshansh Gandhi

Copyrighted 2016. Content published with author's permission.

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