If you're going to place a bet on the smartphone wars, you have an option besides trying to pick a winner between Apple's mobile devices and those using Google's Android platform.
Instead, you could choose to invest in chipmaker Qualcomm, a company that's become a wireless technology supplier to both main camps (as well as to more marginal rivals such as BlackBerry) in the ongoing battle.
San Diego-based Qualcomm has been the communications chip of choice for Samsung and other makers of Android-run handsets and tablets for several years, and last year Apple chose Qualcomm for the main wireless chip in its latest model, the iPhone 5.
This week, Qualcomm will preview features of its newest chip -- planned for shipment in the second half of this year -- that include its own voice-command system and quick-charging technology, which cuts almost in half the time required to recharge a device that has it.
The company said at the International CES show in January that more than 50 portable devices will use the chip, known as the Snapdragon 800, and Qualcomm plans to demo the new features at a major wireless industry conference in Barcelona, the Mobile World Congress.
There are at least two good reasons to like Qualcomm as a core technology holding, as long as the shares are bought on pullbacks and not near long-term highs (read more on this below).
The first reason is that smartphone chips, like PC chips and networking chips before them, are gradually integrating more capabilities, such as voice recognition, into their own chip-set designs.
That frees up hardware makers to develop even more innovative features.
So while older or less-innovative handsets quickly become a commodity, making chips that power the snazziest devices -- whether made by Qualcomm or rivals such as Nvidia, Texas Instruments or Intel -- is a business that has created a lot of value for shareholders.
Qualcomm, founded by chip researcher and former CEO Irwin Jacobs, who earned key wireless patents, also gets nearly a third of its revenue from licensing technology to other chipmakers.
That licensing revenue stream, which contributed 30% of the company's revenue in its most recent quarter, is a high-margin business that helps boost overall profitability. It's also the second good reason to like Qualcomm shares. (continued...)
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