By Jonathan Goetz
April 28, 2016 (San Diego) -- If you use an iPhone, Samsung or LG smartphone, chances are your phone connects to the web using chips patented by San Diego company Qualcomm. However, in an earnings call to investors Wednesday, Qualcomm CEO Steve Mollenkopf hinted that Apple may switch to chips made by Intel instead of Qualcomm. This sent shares back to their pre-rally levels.
It has been a bumpy ride this week for Qualcomm, with a strong second quarterly earnings report of 89 cents per share on Tuesday, beating analysts’ estimates by about seven cents per share. Qualcomm also announced that it had settled its arbitration with LG, which says it paid for more licenses than it ended up using. Qualcomm earns revenue both by directly providing chips and by licensing their broad range of patents.
Qualcomm’s MDM9635 LTE chipset used by the Apple iPhone 6s provides theoretical downlink speeds of up to 300 megabits per second (Mbps) and uplink speeds of up to 50 Mbps. The new 7360 LTE modem chip being developed by Intel has theoretical downlink speeds of 450 Mbps and uplink speeds of 100 Mbps. Despite potentially losing a major contract with Apple, Qualcomm made inroads into the Chinese market, picking up a patent licensing deal with Chinese state-owned electronics manufacturer Hisense.
Disclosure: the author owns shares of Qualcomm (NASDAQ: QCOM)