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Qualcomm: Expect Better Snapdragon Sales

Summary

The Samsung Galaxy S7/S7 Edge and Xiaomi Mi5 are selling well.

The Snapdragon 820 SoC has no overheating/throttling issues.

Asustek is increasing its order of Qualcomm processors.

Qualcomm is better off focusing on higher-margin processors.

I expect the excellent sales trend of Samsung (OTC:SSNLF) Galaxy S7 and Xiaomi Mi5 to help Qualcomm (NASDAQ:QCOM) this year. This is contrary to the claim that Qualcomm's fiscal 2016 revenue will not improve. Healthy sales of higher-margin Snapdragon processors could compensate for any reduction in modem sales for the iPhone 7.

Yes, smartphone sales are slowing, but this year will still post 7% growth. More people will still be buying new Snapdragon 820-powered phones.

Samsung's rejection of the Snapdragon 810 indeed contributed to the 14% decline of Qualcomm's mobile processor shipments last year. However, winning back the support of Samsung is a big boost to Qualcomm's top line this year.

Source: Qualcomm

As the world's top vendor of phones, Samsung's help will go a long way in improving the average selling prices of Snapdragons for Fiscal 2016. Samsung's acceptance of the high-end Snapdragon 820 (SD820) is inspiring other OEMs to use it too.

OEMs will offer alternatives to the Galaxy S7. They will also likely use SD820. The Snapdragon 820-equipped U.S. versions of the Galaxy S7 tout first month sales that are 30% higher than last year's Exynos-powered Galaxy S6 handsets.

Direct-selling specialist, Xiaomi has also reportedly received reservations of 16.8 million units for the Mi 5. The first flash sale processed four...


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