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Friday, February 1, 2013

Plays For Samsung's Global Smartphone Leadership


Plays For Samsung's Global Smartphone Leadership

January 1, 2013  | 16 comments  |  about: SSNLF.PK, includes: AAPL, BRCM, CRUS, IFNNY.PK, INTC, SIMG, SWKS,WLFMF.PK
Disclosure: I am long INTC. (More...)
Samsung (SSNLF.PK) is taking the global smartphone market by storm.
According to an internal source, Samsung expects to ship 350 million smartphones in 2013. That's a lot of handsets. To put the number in perspective, Apple (AAPL) has sold 269 million iPhones since their 2007 introduction. You'd need to throw in all the iPads ever shipped to get that large a figure.
Samsung surpassed Apple in the world's smartphone market earlier this year. Consider the breakout Samsung move seen below:
(Data sourced from IDC)
Argue what you will about Apple and its whopping smartphone profits, Samsung has become the volume leader.
Who benefits from Samsung's success? (Besides, of course, Samsung)
350 million smartphones means 350 million transmitters, 350 million amplifiers, and 350 million receivers. While Samsung manufactures their smartphones and provides the battery, camera and chip, a number of companies supply components and stand to gain from 2013's Galaxy III S sales.
Whose components are inside the Samsung Galaxy III S?
The teardown reveals:
- Intel Wireless PMB9811X Gold Baseband processor
- Broadcom BCM47511 Integrated Monolithic GNSS Receiver
- Skyworks SKY77604 Multi-Band Power amplifier
- Silicon Image 9244 low-power MHL Transmitter
- Infineon PMB5712 RF transceiver
Intel (INTC)
For all the talk about Intel's absence from the cellular market, Intel is coming on strong in baseband processors. Reportedly, it has 15% of a $15 billion market. With its Galaxy III S presence, Intel's share will likely increase.
Wolfson Microelectronics (WLFMF.PK)
Cirrus Logic (CRUS) supplies the acoustics for the iPhone. That has made Cirrus a favorite Apple derivative play. What about Wolfson? It's Samsung's go-to supplier for sound. Wolfson's audio hub is in Samsung Galaxy III S and its Note 10.1 tablet. This British $371 million market cap electronics firm bears a look.
Silicon Image (SIMG)
Silicon Image's MHL transmitter in the Samsung Galaxy III S goes a long way to establishing MHL as an industry standard and SIMG as a major player. Silicon Image derives 60% of its sales from mobile. Two years ago, the company wasn't even in the mobile market.
Skyworks (SWKS), Broadcom (BRCM) and Infineon Technologies (IFNNY.PK) benefit from being in both the Galaxy III S and iPhone. Regardless of who wins the smartphone wars - Apple or Samsung - Skyworks, Broadcom, and Infineon have already won.
Samsung (SSNLF.PK)
And, of course, the obvious play on Samsung? Samsung. It designs, manufactures, and makes many of the components that go into its mobile devices. Samsung's smartphone division has boosted both top and bottom line. Last quarter, Samsung's mobile sales and profits rose82% and 132% respectively year-over-year. Over half of Samsung's revenue and more than two-thirds of its operating income comes from mobile. Two years ago, mobile contributed only a quarter of sales and income. Samsung's smartphone prowess helped increase operating margins last quarter to 15.6%, a 530 basis point improvement over year-ago quarter.
Samsung currently is a $198 billion market cap company. Crazy as it seems, in two years, this Korean titan may displace Apple as the world's most valuable company. Along the way, Intel, Wolfson, and Silicon Image may benefit.
Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.
Comments (16)
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  •  
    Nice article. I'm looking at these mobile plays too:

    8 Potential Takeover Targets In Mobile
    http://seekingalpha.co...
    1 Jan, 03:46 PMReply! Report Abuse  |  Make Author's PickLike0
  •  
    Don't forget to keep in mind there will be stock that naturally double in 2013 RAD at Mondays close $ 1.40. Rad recently produced numbers that crushed analyst expectations and now analyst are on there heels chasing to get ahead of there raised guidance.
    1 Jan, 04:30 PMReply! Report Abuse  |  Make Author's PickLike0
  •  
    Stephen

    Your statement that Intel has 15% of the baseband processor market is somewhat easy to misinterpret. Intel's acquisition of Infineon's LTE products should not be confused with Intel having a 15% market share of the SOCs that run those products.
    1 Jan, 05:25 PMReply! Report Abuse  |  Make Author's PickLike0
  •  
    You had me uninterested at the first paragraph, i.e. "Samsung is taking the global smartphone market by storm." Giving away product--especially giving away your top products--is not a sign of taking a market.
    1 Jan, 05:48 PMReply! Report Abuse  |  Make Author's PickLike2
  •  
    S3 and Note command the same premium as Iphone 5.
    Prices are subsidized from verizon wirless
    Iphone 5 $200
    Iphone 4s $100
    Iphone 4 Free

    Samsung Note 2 $300
    Samsung s3 $200
    Samsung Stratosphere $130
    Galaxy Nexus $50
    Galaxy Stellar free

    Doesnt look like Samsun is "giving away" their phones to me.
    2 Jan, 05:05 AMReply! Report Abuse  |  Make Author's PickLike1
  •  
    You know what's funny? I saw the New Year's celebration on tv last night & spotted like 5 iPhones during the broadcast. Not one Samsung product. All the while Samsung paid for the event. How about them Apples.
    1 Jan, 05:59 PMReply! Report Abuse  |  Make Author's PickLike2
  •  
    my wife and I both have galaxy S3 on verizon, that phone crushes the Iphone 5, I had one when they first came out, so this is not just a biased fanboy opinion...
    9 Jan, 03:26 PMReply! Report Abuse  |  Make Author's PickLike0
  •  
    What does the Intel Wireless PMB9811X Gold Baseband processor do?
    2 Jan, 12:24 AMReply! Report Abuse  |  Make Author's PickLike0
  •  
    I believe you have the wrong ticker for Wolfson Microelectronics. Should be WLF
    2 Jan, 02:50 AMReply! Report Abuse  |  Make Author's PickLike0
  •  
    If you saw the broadcast of the countdown here in Hong Kong the picture was decidedly different. From the street to the subway, Samsung is all over the place. It has also become the favorite of techie early adopters and women, many who were previous Apple devotees. I've been an Apple fan-boy but have to say there clearly is some serious mojo for Samsung in Asia.
    2 Jan, 03:32 AMReply! Report Abuse  |  Make Author's PickLike2
  •  
    Just as an FYI it is the Galaxy S III, not III S. Good article.
    2 Jan, 03:47 AMReply! Report Abuse  |  Make Author's PickLike0
  •  
    GREENSBORO, N.C., Aug. 13, 2012 (GLOBE NEWSWIRE) -- RF Micro Devices, Inc. (Nasdaq:RFMD), a global leader in the design and manufacture of high-performance radio frequency components and compound semiconductor technologies, today announced it has begun production shipments of its ultra-high efficiency power amplifiers to Samsung in support of the highly anticipated next-generation Galaxy S3 4G LTE smartphone.

    RFMD expects to supply the majority of the 3G and 4G power amplifiers in Samsung's highest volume smartphones this calendar year. RFMD already supports multiple feature phones, smartphones and tablets for Samsung with a broad range of products, including PowerSmart® power platforms, ultra-high efficiency power amplifiers, and other critical high-performance components. This most recent 4G LTE smartphone to be supported by RFMD features a dual core multi-mode 3G/LTE modem.

    Eric Creviston, president of RFMD's Cellular Products Group, said, "These shipments of RFMD's ultra-high efficiency 3G/4G power amplifiers to Samsung underscore our strong design momentum in next-generation mobile devices and our early market share leadership in the rapidly growing LTE market. We currently forecast robust growth in LTE in calendar 2012, as LTE devices grow from approximately 20 million units in calendar 2011 to greater than 100 million units in calendar 2012."
    2 Jan, 06:41 AMReply! Report Abuse  |  Make Author's PickLike0
  •  

    The ABI teardown of the Samsung Galaxy S3 LTE (SHV-E210s) reveals the components include:

    Samsung: 2G/3G/4G 40-nm modem CMC221S
    Samsung: Quad core Exynos 4412 application processor
    Samsung: high-performance ISP
    Triquint: QuadBand EDGE PA
    Avago and RFMD: 3G PAs
    Broadcom: BCM4334 WiFi/BT/FM combo connectivity chip
    Wolfson: WM1811AE audio hub IC
    Knowles: MEMS microphones
    STMicroelectronics: inertial and pressure sensor
    FCI: FC7860 2G/3G/4G transceiver IC
    Maxim: power management ICs
    2 Jan, 07:08 AMReply! Report Abuse  |  Make Author's PickLike0
  •  
    QCOM ?
    2 Jan, 09:52 AMReply! Report Abuse  |  Make Author's PickLike0
  •  
    People keep expressing surprise that Samsung Electronics might overtake Apple is a credit to Apple's success considering that Samsung Electronics is not just some phone-set maker underdog.

    From wiki: It is the flagship subsidiary of the Samsung Group and was the world's largest technology company by revenues from 2009 to 2012. Samsung Electronics has assembly plants and sales networks in 61 countries and employs around 221,000 people.

    Samsung Electronics is the world's largest mobile phone maker by 2011 unit sales and world's second-largest semiconductor chip maker by 2011 revenues (after Intel Corporation). It has been the world's largest television manufacturer since 2006 and the world's largest maker of LCD panels for eight consecutive years. It has the largest marketshare worldwide in memory chips. The company was the world's largest vendor of smartphones in 2011.

    As for Samsung GROUP:

    Notable Samsung industrial subsidiaries include Samsung Electronics (the world's largest information technology company measured by 2012 revenues), Samsung Heavy Industries (the world's second-largest shipbuilder measured by 2010 revenues), Samsung Engineering and Samsung C&T (respectively the world's 35th- and 72nd-largest construction companies), and Samsung Techwin (a weapons technology and optoelectronics manufacturer). Other notable subsidiaries include Samsung Life Insurance (the world's 14th-largest life insurance company), Samsung Everland (operator of Everland Resort, the oldest theme park in South Korea) and Cheil Worldwide (the world's 19th-largest advertising agency measured by 2010 revenues).

    Samsung produces around a fifth of South Korea's total exports and its revenues are larger than many countries' GDP; in 2006, it would have been the world's 35th-largest economy.

    Oh, and they also revealed in Sept., 2012 that they used over 250 factories in China EXCLUSIVELY for assembling Samsung products.
    3 Jan, 03:12 PMReply! Report Abuse  |  Make Author's PickLike0
  •  
    Apple has had a brilliant strategy, Make one device really cool and make everyone want it. You have no choice in device (unless you want some thing older)
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