3G mobiles could increase in fast rate in China and India
Samsung and LG. Qualcomm mentioned in its recent quarterly earnings that 3G mobile phone adoptions could increase at a faster than expected rate as a result of high demand in emerging markets like China and India. Management has indicated that global 3G phones sold could reach 625 million in 2010, up 25% from the 500 million phones sold in 2009.
Below we explain the importance of 3G technology, how 3G benefits Qualcomm, why 3G sales could grow faster than expected and how such growth could translate to a 5% upside to Qualcomm’s stock.
3G provides faster internet access as well as increased network capacity and flexibility. According to Wireless Intelligence, a mobile market research firm, the number of 3G subscribers has surpassed worldwide has already surpassed 1 billion.
CDMA mobile phone penetration has increased from 28% of mobile phones sold globally in 2006 to 40% in 2009. We forecast that penetration will increase to 65% by the end of Trefis forecast period, implying slightly under 1.2 billion CDMA mobile phones sold.
Based on Qualcomm management’s forecast that there could be 625 million 3G mobile phones sold in 2010, we estimate that 2010 CDMA mobile phone penetration could reach 48%, higher than the 45% we currently forecast.
China and India are two of the world’s largest wireless markets. China has around 800 million mobile phone subscribers, while India has around 500 million subscribers. China is in the final implementation stage for 3G adoption while 3G spectrum bidding has started recently in India. These events will increase the overall addressable market for Qualcomm.
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