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Apple ( AAPL ) will tap No. 1 chipmaker Intel ( INTC ) to source 30-40 million iPhone 7 modems, but rival Qualcomm ( QCOM ) will remain top dog, Canaccord analyst T. Michael Walkley predicts. Meanwhile, Qualcomm’s Chinese-licensing recovery is under way despite a $100 million quarterly dispute with South Korean LG, he wrote in a research report. Walkley reiterated his buy rating and 65 price target on Qualcomm stock. For fiscal Q2 ended March 27, the consensus of 35 analysts polled by Thomson Reuters expect Qualcomm to report 96 cents EPS minus items on $5.34 billion in sales, down 33% and 23%, respectively, vs. the year-earlier quarter. Three months ago, Qualcomm guided to $4.9 billion to $5.7 billion in sales and 90 cents to $1 EPS ex items. Then, Qualcomm outlined its improving Chinese negotiations which included four re-signed government-approved contracts. “With the recently signed Lenovo deal, we believe Qualcomm now has the top four Chinese (smartphone makers) licensed for 3-mode and all 3G/4G devices,” Walkley wrote in a research report. He expects licensing sales to buoy in the latter half of 2016. Licensing sales toppled 20% sequentially back in fiscal Q3, ended last June 28, to just short of $2 billion amid the negotiations. Since then, the unit has seen 7%-8% sequential declines. No more, Credit Suisse analyst Kulbinder Garcha says. For Q2, Garcha expects $2.2 billion in licensing sales, up 36% sequentially and down 10% vs. the year-earlier quarter. He expects $7.5 billion in total 2016 licensing revenue growing to $7.6 billion in 2017. But Qualcomm’s chip sales could get snagged in headwinds, Garcha says. Qualcomm quintupled its content in the Samsung Galaxy S7 , teardowns show, but it will likely lose some iPhone 7 share to Intel even as Apple shipments lag. Garcha retained his outperform rating and 67 price target on Qualcomm stock, which is trading near 51, up about 3 percent in 2016. Scalper1 News
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