Weekly Mobile Notes: Apple, Qualcomm And Nokia

The past week saw quite a few developments in the mobile sector. Nvidia (NASDAQ:NVDA) announced its first LTE-integrated Tegra solution, the Tegra 4i, in a bid to compete more effectively with Qualcomm (NASDAQ:QCOM) by making the Tegra more accessible to low- to mid-end smartphones. Apple’s (NASDAQ:AAPL) stock fell below the $450 mark once again this week as speculations surrounding Foxconn’s recent hiring freeze did the rounds, adding more fuel to rumors that the iPhone demand is slowing down. Nokia (NYSE:NOK), meanwhile, continued to gradually roll out Lumia 620 in new markets in Europe and Asia in a bid to push through lower tiers and gain a wider audience for the Windows Phone platform.

Qualcomm

In what could pose a big potential threat to Qualcomm’s dominance in the smartphone chipset market, Nvidia has managed to integrate LTE capabilities on a Tegra chipset. The Tegra 4i, which is touted to be about half the size of Qualcomm’s competing Snapdragon, is Nvidia’s first app processor with an integrated LTE modem and will help make the Tegra more accessible to low- to mid-level smartphones. Nvidia also claims that the 4i generates performance that is almost 2.5 times better than the recently introduced Snapdragon 800 on a per square millimeter basis. While third-party performance reviews aren’t out yet, if Nvidia’s claims stand, it could emerge as a strong rival to Qualcomm, especially in the emerging markets where the focus is more on cost minimization and power efficiency. (see Nvidia Takes On Qualcomm With Its First LTE-integrated Tegra 4i)

Apple

Foxconn, one of Apple’s biggest manufacturing partners, announced Wednesday that it has frozen hiring at its Shenzhen plant in China, sparking intense speculation that this is related to a possible slowdown in demand for the iPhone 5. This added more fuel to rumors that Apple may have started cutting component orders for the iPhone amid intense competition from Samsung (PINK:SSNLF) and other handset makers using Google’s (NASDAQ:GOOG) Android software. While Foxconn sought to play down the rumors by saying that the hiring freeze wasn’t related to any one customer but a higher-than-expected return rate of employees following the Chinese New Year, the uncertainty saw Apple fall more than 2% and below the $450 mark once again in trading Wednesday.

Considering that the iPhone is the single biggest driver for Apple and accounts for about half of the company’s value by our estimates, the intense market nervousness is understandable. A big reason for Apple’s fall of over 35% in the past five months has also been a growing concern that the iPhone demand is waning amid an increasing number of competitive products in the marketplace such as Samsung’s Galaxy S smartphones and Note phablets. This could have an impact on margins as well – something that we have already incorporated in our long-term forecasts. However, we also believe that the iPhone still has a lot of market opportunity left, especially in the emerging markets where Apple is yet to sign subsidy contracts with some carriers. (see Foxconn Noise Highlights Apple’s Need For A China Mobile Deal)

Nokia

With the new high-end Lumia smartphones (920 and 820) off to a good start, Nokia is now looking to push through lower tiers and gain a wider audience for the Windows Phone platform. The Finnish handset maker has been gradually launching the Lumia 620, its most affordable Windows Phone 8 yet, in several Asian and European markets in a bid to make up for the loss of Symbian market share in recent quarters.

Priced at just $249 (excluding local taxes), the latest Lumia is aggressively priced and easily undercuts the only other mid-range Windows model, the HTC 8S, in all the launch markets. Moreover, the fact that Nokia is launching its mid-level Windows Phones before Samsung or LG do the same, and before BlackBerry gets its entry-level BB10 handsets out next year, should give it a significant head start over rivals in emerging economies. With cheap Android smartphones flooding the market and pushing prices down to sub-$150 levels, Nokia still has some way to go before Windows Phone 8 reaches the very low-end of the market, but the Lumia 620 does make for a very good start. (see Nokia Takes On Android With Budget Lumia 620 Smartphone)

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