Qualcomm Strengthens Its IoT Footprints With Duo Of WiFi Chips For Connected Devices

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Leading mobile chipmaker Qualcomm (NASDAQ:QCOM)’s subsidiary, Qualcomm Atheros, has introduced two new intelligent connectivity solutions for the Internet of Things (IoT): the QCA401x and QCA4531. The devices are optimized to provide programmable WiFi connectivity to a range of small systems across development platforms so as to give customers an expedited and cost-effective path to deployment. (Read Press Release)

1) QCA401x – This chip is designed to ease manufacturer demand for increased computing and memory while lowering size, cost and power consumption. It features a fully integrated micro controller unit with up to 800KB of on-chip memory and an expanded set of interfaces to directly interconnect with sensors, display, and actuators, further reducing system cost, size and complexity. The QCA401x also includes a suite of communication protocols, including Wi-Fi, IPv6, and HTTP, as well as an advanced security feature designed to maximize security in IoT devices.

2) QCA4531 – This chip is a low cost turnkey solution that brings high-performance connectivity with a user-programmable Linux/OpenWRT environment. It is designed to serve as an IoT node taking advantage of the Linux framework and as a hub to enable an IoT Ecosystem. “As the IoT ecosystem expands, the QCA4531 is ideal for multi-protocol bridging and communication, bringing together multiple wireless medium and bridging between different ecosystems,” said Qualcomm. The QCA4531 can function as an Access Point supporting up to 16 simultaneous devices, and is also power-optimized to enable appliances to meet international standards for energy efficiency.

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Qualcomm also announced additional features in its AllPlay smart media platform, including Bluetooth to WiFi re-streaming, custom audio settings and optimized synchronization. The new AllPlay feature combines Bluetooth and WiFi for “whole home streaming”. This means that all local or cloud-based music on a consumer’s smartphone can be streamed to any Bluetooth-compatible AllPlay speaker and then re-streamed over WiFi to multiple AllPlay speakers, all in sync. This allows simple wireless connectivity to individual speakers or an entire home audio system over the user’s existing home WiFi network, providing an advantage over Bluetooth-only speakers which are limited to one-to-one streaming. (Read Press Release)

Qualcomm recently provided guidance on how big the IoT sector is for the company. The company said it made $1 billion in revenue last year on chips used in a variety of city infrastructure projects, home appliance, cars and wearable. There were 120 million smart home devices shipped with Qualcomm chips in them last year. In addition, there are 20 million cars equipped with its chips, and Qualcomm silicon is used in 20 types of wearable devices. Even though the company makes the most money selling the wireless chips and processors for a large chunk of the smartphone market, it expects about 10% of its chip division revenue to come from non-smartphone devices in 2015. (Read Press Release)

Our price estimate of $71 for Qualcomm is in line with the current market price. For fiscal year 2015 we estimate the company to report revenue of $29 billion and net income of $8.1 billion. Also, our non-GAAP EPS estimate is $4.7 as compared to the market consensus of $4.82.

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