Qualcomm Ventures, the investment arm of Qualcomm Incorporated QCOM, recently inked an agreement with Reliance Jio Platform, a wholly-owned subsidiary of Indian multinational conglomerate Reliance Industries Ltd., to acquire a 0.15% equity stake in the technology firm for $97 million. The strategic deal will help Qualcomm rollout advanced 5G infrastructure and services across the subcontinent, while gaining a foothold in the budding technology enterprise.
Notably, Qualcomm has joined a long list of firms who have invested in Reliance Jio Platform, including Facebook, Inc. FB, KKR & Co. Inc. KKR, venture capital firm Vista Equity Partners, Silver Lake and General Atlantic. With the latest investment, Reliance has raised about $15.7 billion since April this year by selling a 25.2% stake in Jio Platforms to investors. This, in turn, is likely to offer the requisite wherewithal to the Indian telecom company to upgrade the legacy network infrastructure for deploying 5G services in the near future.
The partnership with Reliance is likely to offer lucrative revenue-generating opportunities for Qualcomm in a vast market. Markedly, Qualcomm has already unveiled a 5G chipset for low-cost smartphones for the masses. The Snapdragon 690 5G chipset is the first SoC (System-on-Chip) in the 600 series to support 5G services at accessible price points. This is likely to usher in more affordable 5G Android mobile handsets, with a plethora of unique features in its category, by the second half of the year.
Built on Samsung’s 8nm fabrication process, the Snapdragon 690 is an octa-core CPU, featuring a 2+6 CPU core configuration. The two big cores are the Kryo 560 cores while the remaining six little cores are ARM Cortex-A55 cores. Compared to its predecessor Snapdragon 675, the new chip is billed to offer up to 20% better CPU and up to 60% faster graphics performance.
The chip has an integrated Snapdragon X51 5G modem that supports global 5G standards with multi-SIM functionality and dynamic spectrum sharing. It supports a download speed of up to 2.5Gbps and upload speed of up to 660Mbps. In addition, the chipset has a new AI engine called ARCSOFT that features a Hexagon Tensor Accelerator for enhanced performance in real-time Snapchat filters and smooth transition when switching between ultrawide, wide and telephoto cameras.
The chipset also significantly improves multimedia performance with the ability to record in HDR10 format for FHD+ displays with a 120Hz refresh rate and support for 4K video recording at 30fps and stills up to 192MP. Furthermore, the chip boasts a new enhancement for video encoding and supports faster charging with Quick Charge 4+. With the FastConnect 6200 system that brings Wi-Fi 6, Bluetooth 5.1 and 2×2 MU-MIMO configurations, the Snapdragon 690 is arguably the most powerful SoC yet in the lower mid-range segment.
Leveraging on such indigenous products and technology collaborations, Qualcomm aims to retain its leadership in 5G, chipset market and mobile connectivity. For calendar year 2020, Qualcomm estimates sales of 175-225 million of 5G handset units. The company anticipates witnessing two inflection points in fiscal 2020. The first inflection point realized during the fiscal first quarter is likely to continue in the first half of fiscal 2020 with continued strength and acceleration of 5G demand. The next inflection point is anticipated to be realized in the fiscal fourth quarter with the launch of additional 5G flagship handsets and is likely to extend to fiscal 2021.
With diligent execution of operations, the stock has gained 22.7% over the past year against the industry’s decline of 1.3%.
We remain impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock. Another better-ranked stock in the industry is Nokia Corporation NOK, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Nokia has a long-term earnings growth expectation of 15.6%. It delivered a positive earnings surprise of 129.1%, on average, in the trailing four quarters.
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