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Fiscal 2016 will be a transition year for this business, and we expect our performance in the second half of the year to be much stronger than in the first half, which will continue to be affected by the factors that impacted 2015. Our performance improvement will be driven by our strong lineup of new chipsets across tiers, benefits from our cost reduction efforts, operational improvements, and reduced product costs as we transition to the 14 nanometer node.
In my view the activist investors can do all the revolting they want to but they cannot change the economic reality that the semiconductor industry in Q's main market is coming under the control of the people that own its consumers. In this respect it is going the way of all other industries. Q cannot escape from the squeeze between Apple/Samsung at the top and Mediatek + the Chinese white goods players at the bottom. If the Investors get rid of its first rate CEO or succeed in breaking it up it can only hasten its decline. It is possible but maybe not probable that Mollenkopf will get into server / enterprise / IOT markets soon enough and in sufficient volume to make a difference but subject to that he is in a place where it can only get more difficult to find the space to breathe. In smartphones the consumer is now the King, not the technologist. The same point applies to Intel, of course, but that is another story. I would back Mollenkopf to escape the vice rather than anyone else, but I don't see it.
According to @qualcomm, on Tuesday, at 12:15PMET, Qualcomm will formally debut the S820, and Tim McDonough will respond to questions concerning same. You won't have long to wait to make an initial judgment about that product.
GOOGLE leads a multi-vendor hardware ecosystem, and is quite different in concept from Apple. I see GOOGLE as wanting to dictate performance/feature standards ( like Microsoft with Windows Phone), rather than design standards. But if they seriously decide to bring all chip design and manufacturing in house, that would suggest they'd be most interested in acquiring a spun-off QCT, should activist Jana get their way. There are many moving parts in this space these days, so I'll just grab a box of popcorn and watch the movie.
This is the biggest challenge I see for QCOM is systems companies going vertical and developing their own SOCs with integrated modems. Apple started it and now Samsung, Huawei, and the rest have no choice but follow. This is a big win for ARM as well because they are selling architectural licenses to some very innovative companies who are pushing the limits of their technology much farther than ARM can. This type of collaboration is the foundation of ARM's success by the way and will keep them strong, absolutely.
QCOM also has very aggressive competition in Mediatek and Intel. Remember, Intel paid systems companies to take 40M their SoCs last year and now they are pushing modems. On the other side Mediatek is putting pricing pressure on QCOM like never before.
Good points, Daniel. That's precisely why this will be so interesting to watch. One can only imagine all the three dimensional chessmen being hung from the fault tree planted in the center of the War Room, where their Strategic Review is being conducted. I wouldn't count Qualcomm out. The DNA of Irwin and Andy still flows in their veins.
Good points, Daniel. That's precisely why this will be so interesting to watch. One can only imagine all the three dimensional chessmen being hung from the fault tree planted in the center of the War Room, where their Strategic Review is being conducted. I wouldn't count Qualcomm out. The DNA of Irwin and Andy still flows in their veins.
Qualcomm is an interesting company for sure. In our "Mobile Unleashed" book we have a chapter on QCOM. It's an 8k word history of QCOM. I just posted a draft of it in case you are interested:
Arstechnica, a good tech site that does a lot of reviews for Android phones, thinks that QCOM's advantage is mostly marketing , not a technical one. If that's true, i think it's just a matter of time until QCOM suffers both at the low-end and at the high-end.
Google made a foray into the semiconductor business with Motorola. That did not turn out so well. The Ars Technica article talks about a lot of R&D projects, but if you are going to make an SoC for phones you need sufficient volume to justify the expense. I'd expect to see Google do R&D for a good long while before trying to go up against the other players in the processor space.
It took apple a long time to assemble their team from PA Semi and Intrinsity. And, they already had a shipping phone product to bolt it into.
Tom, Google have a lot of power to dictate what goes into Android phones, and especially the more expensive ones . That's a lot of volume.
And i'm more inclined to think Google will cooperate with some of the big guys than start from 0. For Google, the chip business isn't that great place to be in.
Interesting to note, QCOm and Xiaomi have been working together since day one. In fact, QCOM is an investor in Xiaomi. MediaTek is also a partner of Xiaomi. The real news is that Xiaomi now has an ARM architectural license and will make their own SoCs. Same with Huawei and Spreadtrum. The merchant SoC chip business is not something I would bet on in the coming quarters, especially in China.
While it's fashionable to seek greater silicon independence, in an effort to emulate Apple's disproportionate profit performance, I would argue that many will try, but abandon that strategy. Most will be better served by exploiting their core competence, rather than incurring the costs and performance risks of going more vertical. Leadcore may help Xiaomi at the lowest tier, but will be non-competitive in the mid-high tiers.
Agreed that Google is unlikely to make much of a dent in the handset biz (though that doesn't seem to stop them trying lots of different experiments). But not in the chip biz? I disagree. For Google, the server domain is very important not as a merchant but for their own purposes. I expect them to continue to invest in that area
