THESIS: A strong position in 5G chips, coupled with expanded royalties, may position Qualcomm for sales and EPS growth in fiscal 2020. Higher-priced 5G handsets aid its royalty business, while increased use of its advanced 5G chips will drive up chip content and average prices. This content is further enhanced by a wider portfolio of radio-frequency chip offerings. The company is set up to gain from a richer 5G handset mix and pricing, as well as a higher-end chip mix and content expansion of its own portfolio. Royalty mix aids margin, expanding EPS faster than sales. A softer, slower global 5G ramp up, especially outside China, is the key risk.
Speed and lag are two of the biggest obstacles to moving more of the global economy online. 5G is up to 100 times faster than 4G and removes lag from the equation. China switched on a national 5G network earlier this month and the majority of major economies plan to move to full roll out in 2020. Samsung and some Chinese companies are producing 5G phones but the number of models on offer will also significantly increase in 2020.Click HERE to subscribe to Fuller Treacy Money Back to top