According to the new teardown analysis done by iSuppli on Apple’s (NASDAQ:AAPL) iPhone 4S, Qualcomm (NASDAQ:QCOM) could be the big winner with its chipsets costing $14-15 per iPhone 4S.  This could be huge for Qualcomm as it rides on to the success of Apple in the smartphone market. Incidentally, Apple set up a record last week by selling more than 4 million iPhone 4S in the first three days of its launch.
Our $59 price estimate for Qualcomm stock is about 15% above market price.
The 4S will do more than its predecessor for Qualcomm
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Historically, Apple hasn’t played much of a role with Qualcomm’s growth. For example for the iPhone 4, Apple used Qualcomm chips only for phones destined for Verizon’s (NYSE:VZ) network given that Verizon’s network is compatible with CDMA technology, which Qualcomm supports.
iPhone 4S’ success will not only help Qualcomm compete better in the chipset market, but it will also will not be dilutive to its average chipset pricing. According to the iSuppli report, the cost of Qualcomm chipsets would be around $15 per iPhone 4S, which is slightly less than its expected average pricing of $17 for 2011.
The main benefit will come from the market share gain from Qualcomm’s baseband processor replacing Infineon’s (now acquired by Intel).Notes:
- Apple’s iPhone 4S Cracked Open, Money Spills Out, AllThingsD quoting iSuppli as the source, October 19th, 2011 [↩]