Qualcomm  is the market leader in the cellular baseband market and competes with MediaTek, Texas Instruments (NYSE:TXN), Broadcom (NASDAQ:BRCM), Marvell (NASDAQ:MRVL), Freescale and Infineon.  Cellular basebands are the core chipsets used in mobile phones to handle voice / data communication to and from wireless devices.

Qualcomm also sells other chipsets used for power management, Bluetooth connectivity and application processing.  For example, Qualcomm’s Snapdragon application processor is used to give mobile phones computing power for handling mobile phone software and applications.

We estimate that the mobile phone chipset business constitutes 43% of the $42 Trefis price estimate for Qualcomm’s stock.  The company’s ability to maintain share in the cellular baseband market, where it is facing increasing competition, will be crucial for Qualcomm’s chipset business and can have a significant impact on Qualcomm’s stock.

Cellular Baseband Most Important Part of Qualcomm’s Chipset Businesss

According the market research firm Strategy Analytics, Qualcomm had a revenue share of 38% in the $11 billion cellular baseband market in 2009.  This implies that 67% (or $4.2 billion) of Qualcomm’s $6.3 billion of chipset revenue in 2009 came from the cellular baseband market, making cellular basebands the most important component of Qualcomm’s chipset business.

source:trefis