Tag Archives: qcom

Chinese ZTE Sanctions Over Iran Sales Could Hurt Apple Chipmakers

A new U.S. export ban against Chinese mobile gear maker ZTE related to its under-the-table sales to Iran could hurt  Apple ( AAPL ) chip suppliers Qualcomm ( QCOM ), Qorvo ( QRVO ) and Skyworks Solutions ( SWKS ), a Pacific Crest analyst wrote Wednesday. Regulators imposed the sanctions Tuesday, alleging that ZTE used four shell companies in China and Iran to “illicitly re-export controlled items to Iran in violation of U.S. export control laws.” The ban prohibits U.S. companies from selling to ZTE. Chinese foreign minister Wang Yi opposed the sanctions, saying that ZTE’s tech purchases support thousands of U.S. jobs, according to the AP. Chipmakers Cavium ( CAVM ), Integrated Device Technology ( IDTI ), Silicon Laboratories ( SLAB ) and Xilinx ( XLNX ) also sell to ZTE. “This approach will only hurt others without necessarily benefiting oneself,” Yi said at a new conference Tuesday. ZTE isn’t banned from selling products in the U.S. but cannot procure components from U.S. companies. U.S. firms can apply for an export license, but Pacific Crest analyst John Vinh sees the government unlikely to grant them. The development could shuffle the smartphone market. ZTE owns about 4% of the global smartphone market, Vinh wrote. Industry tracker IDC says that ZTE competes alongside Xiaomi and Huawei in the low-end to midrange smartphone market, vs. No. 1 smartphone vendor Samsung. Vinh expects short-term effects on chipmakers to be “negligible.” Longer term, he says that ZTE could lose share to Huawei, Ericsson ( ERIC ), Alcatel-Lucent ( ALU ), Nokia ( NOK ), Siemens ( SIEGY ), Xiaomi, Oppo and Lenovo. “Alternatively, ZTE could conform to the U.S. embargo list, which could result in sanctions being lifted,” he wrote. Xilinx is most at risk, with 3%-3.5% of total revenue stemming from sales to ZTE, Vinh estimates. Silicon Labs follows with 2%-2.5% of total revenue wrapped in ZTE sales. IDT, Qualcomm and Qorvo are each 2% tied to ZTE, Cavium 1%-2%, and about 1.5% of Skyworks’ sales stem from the Chinese smartphone maker. Wall Street largely yawned Wednesday, however. Midday on the stock market today , only Qualcomm stock was down, dipping a fraction. Cavium stock was up a fraction. Shares of Qorvo, Silicon Labs, Skyworks and Xilinx were all up more than 1%. Integrated Device Technology stock was up more than 2.5%.

Morgan Stanley Light On Tech But Likes Amazon, Microsoft, Comcast

Amid the sell-off in growth technology stocks in early 2016, Morgan Stanley still likes tech names with plenty of free cash, dividends, improving profit margins and rising market share. In a research report Wednesday, Morgan Stanley said its top tech picks include Comcast ( CMCSA ), T-Mobile US, Microsoft ( MSFT ), Amazon.com, Qualcomm ( QCOM ) and IBM. Morgan Stanley, though, is underweight on the technology sector overall, preferring utilities, financials and health care. “Relative to the broader market, we’ve seen more technology growth stocks with contracting multiples than any time in the last 10 years,” said analyst Adam Parker in the report. He also noted: “Since the (2008) financial crisis, technology stocks with improving margins have strongly outperformed those with high sales growth but no margin expansion.” Here’s what Morgan Stanley likes in some tech stocks: — T-Mobile ( TMUS ). “Competition in the wireless industry is intense,” but T-Mobile continues gain share with its Uncarrier-branded promotions vs. rivals. — Comcast. The cable TV firm has pricing power and invests wisely in broadband infrastructure and NBCUniversal, says Parker. — Amazon ( AMZN ). Its “retail and cloud businesses are both inflecting … which we see leading to higher than expected profitability,” wrote Parker. — Microsoft. It’s getting a boost from “real top-line drivers,” says Parker, citing its Azure public cloud computing business, data center share gains and Office 365 subscriber growth and pricing. — IBM ( IBM ). While IBM is the only large cap U.S. tech stock with institutional ownership at five-year lows, Parker says investors under-appreciate “an accelerating transformation to a more analytics- and cloud-friendly business.” — Qualcomm. “We are overweight as we think recent concerns regarding the royalty and chip businesses are overblown,” said Parker, who expects improving licensing fees in China.

Xiaomi Mi 5 Demand Strong Ahead Of Apple iPhone SE Launch

Sales of Xiaomi’s new Mi 5 popped in China this week, ahead of Apple ’s ( AAPL ) expected launch of the less pricey, 4-inch-screen iPhone SE in the spring. Shares in Qualcomm ( QCOM ), whose Snapdragon 820 processor is built into the Mi 5, lifted more than 1% in the stock market today . Apple stock was down about 0.5% in afternoon trading. Xiaomi said that it had nearly 17 million registrations in hand for the Mi 5 on March 1, the first day of sale in China, though only one-fourth as many devices were reportedly ready for shipment. Xiaomi was the top smartphone seller in China in Q4, with 15% market share, followed closely by Huawei, with Apple in third place. Even though Apple’s December-quarter revenue growth slowed  year-over-year, overall iPhone demand was one reason why Xiaomi missed its 2015 smartphone shipment target, says research firm IHS. While Apple is apparently going small in China and emerging markets, the flagship Mi 5 has a 5.15-in. display that may help Xiaomi promote a new multiperson video chat feature vs. Apple’s FaceTime. At the Mobile World Congress in Barcelona in February, Xiaomi said that it would license U.S.-based  Vidyo’s conferencing technology for an app pre-installed on the Mi 5. The app is also available free on iOS and Android devices. “Scale is crucial for all communications apps, and Xiaomi’s plans to launch the app on Google Play and iOS illustrate this,” said Jack Kent, an IHS analyst, in an email. “Mi Video” supports multipoint videoconferencing, while users of Apple’s FaceTime can video chat with only one other person. While the Mi Video app may give Xiaomi a boost, “there could still be concerns about how much data video calling consumes — users on limited mobile data plans or pay as you go services may not be keen to use such services,” added Kent. At Forrester Research, analysts say that Xiaomi may have challenges. “China’s mobile connectivity has been slow, and videoconferencing can be taxing on a network,” Forrester analysts said in a blog post  on the video app. However, analysts agree that Xiaomi aims to set itself apart with more features aside from pricing its hardware aggressively, especially if it plans to expand globally. “Xiaomi needs to do more with its software ecosystem to significantly grow its business beyond its home market of China,” says an IHS report. That’s where Xiaomi’s partnership with Qualcomm could help. The new Mi 5 is priced  at roughly $300 and $350 with 32 GB or 64 GB of data storage. Xiaomi still garners more than 90% of its sales in China, though demand is growing in India and Indonesia. Xiaomi still doesn’t sell mobile phones in Europe or the U.S. China’s slowing economy is a worry for its local smartphone makers as well as Apple. Apple’s December-quarter sales in China rose only 14% from the year-earlier quarter, down from 99% growth the preceding quarter. The iPhone SE will sell for $400 to $500, said one report. Samsung, meanwhile, was pushed out of the top five smartphone sellers in the December quarter, says Strategy Analytics.