Qualcomm To Miss Short-Term Growth Goals: Morgan Stanley
May 31, 2018 - Written By Daniel Fuller
Chip giant Qualcomm has been facing a number of difficulties in the market lately, and even with the recent announcement of its dedicated Snapdragon XR1 platform for augmented and virtual reality, analysts with Morgan Stanley are convinced that it won’t be able to meet the near-future growth goals set forth by investors. To be clear, the analysts said that this would be the case even if Qualcomm is allowed to buy out NXP, a move that’s been hotly contested thus far. The analysts said that Qualcomm’s troubles with Apple and growing issues with royalty collection will lead to a “period of underperformance”, and there’s not much that Qualcomm can do to mitigate that.
The two biggest moves with growth potential that could possibly get Qualcomm out of this temporary rut are the new XR1 platform and the firm’s potential acquisition of NXP, with both targeted toward helping Qualcomm expand beyond smartphones and networking, two areas where its looming presence is not enough to stave off a downturn that Morgan Stanley analysts are saying is all but inevitable. If the NXP acquisition goes through, Qualcomm will be able to get into the automotive business immediately. The XR1 platform, meanwhile, opens new consumer-facing possibilities for Qualcomm, and a number of big names like Vuzix and HTC VIVE are already hard at work on products that use the new platform.
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Qualcomm has been having some issues with regulators regarding its business model, as well as troubles with properly determining and collecting royalties. Additionally, Qualcomm is currently locked in a legal struggle with Apple over royalties, with Apple calling Qualcomm out for overcharging royalties on the regular scale and demanding a cut of iPhone sales for the famous smartphone’s use of Qualcomm’s networking equipment. One of the big issues there is that Qualcomm has exclusive patents on a number of technologies that are considered “standard essential” for 4G LTE as seen in modern smartphones, meaning even using an in-house chipset as Apple has, or silicon modules from outside sources like MediaTek and others have, does not necessarily mean that you will be able to escape using a piece of equipment from Qualcomm, or using a piece of equipment from another OEM that uses patented Qualcomm technology.
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