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I'd appreciate some thoughts from more informed people than myself. As I understand it: Intel didn't go into mobile devices because of lower margins. Arm has n

by apapli 14y ago

I'd appreciate some thoughts from more informed people than myself. As I understand it: Intel didn't go into mobile devices because of lower margins. Arm has now taken that market, and are killing it because they have the volumes to make the lower margins palatable and not much competition. Intel is now going into the mobile space now as they have decided they are better off with low margins rather than no sales. I could only imagine the total demand for mobile devices is a much bigger market than it ever was for PCs so surely with Intels production capability they can own this segment soon? And with that being said, at the price intel stock is right now, we should be buying them up by the bucket load?

adventured 14y ago
The companies leveraging ARM are the ones really killing it. eg Qualcomm - 100% profit growth in 24 months, to $6.1 billion ($6.6b in last four quarters). They might be the size of Intel in three or four years at this pace, and their market valuation has already passed them (the market is making a clear bet there). ARM itself is tiny by comparison. The real killing is being made by the companies leveraging ARM's designs (QCOM / AAPL / Samsung etc). I view it as akin to taking commodity energy products (which often have good margins to begin with) and leveraging into the chemicals business with extreme margins (everything from Tide to perfume to industrial chemicals).
- corin_ 14y ago
  A few errors in your numbers, it was $6.02 billion, and this was gross revenue not profit - profit was $1.9 billion (still 91% growth in 24 months). However, Qualcomm is more than ARM chips, so really those numbers are only semi-relevant. If Apple started making their own chips, you wouldn't attribute Apple's financial success to that alone. Based on the fact that Qualcomm's profit is ~31.7% of it's revenue (in FY12Q4) you could estimate that the profit from chip sales was closer to $1b/quarter (based on annual chip sales revenue of $12.976 billion in 2012) and then the question is how much of this is from ARM sales, which I don't have an answer to. As to their valuation passing Intel - again, this is based on more than chip sales, and Intel's market share is still almost four times that of Qualcomm currently (though this is likely to keep dropping, for sure). Personally I'm still far more keen on ARM than the manufacturers. Having factories that create chips from ARM's licenses is very different to turning commodity products into goods like perfume - in the latter it is in part about creativity and marketing (and probably patents, etc. etc.) in the former it is much more about economy of scale, efficiency, etc. What would it take to beat Qualcomm when it comes to producing ARM chips, and can it be done - get the price lower, and yes it probably could be by someone like Texas Instruments, Samsung, event Intel if they wanted to, potentially AMD (who do want to but I think probably are too small to). How about beating ARM themselves - all of a sudden you're not just trying to out-price the same products, you have to come up with better architecture and get the world to switch over. Whole different ball game. All that said, Qualcomm are definitely in a great position, and are doing really well. But from a spectator point of view I think ARM are much more exciting, from an investor point of view I think that ARM's long-term future has more potential, and short-term they are paying out dividends per share greater than Qualcomm's total earning per share. edit: Oh, and remember that even after the decline in profit, Intel's quarterly net profit is still higher than Qualcomm's. For now. Number sources: Qualcomm FY12 Q4 http://www.ft.com/cms/s/0/089f7c6e-6b23-11e2-8017-00144feab49a.html#axzz2Qgbslvzk http://www.ft.com/cms/s/0/089f7c6e-6b23-11e2-8017-00144feab4... ARM FY12 Q4 http://online.wsj.com/article/SB10001424052970204740904577194273282374432.html http://online.wsj.com/article/SB1000142405297020474090457719... 2012 chip sales https://en.wikipedia.org/wiki/Worldwide_Top_20_Semiconductor_Sales_Leaders#Ranking_for_year_2012 https://en.wikipedia.org/wiki/Worldwide_Top_20_Semiconductor...
  - adventured 14y ago
    No, Qualcomm's profit was $6.1 billion in 2012. With $19 billion in sales. It was $4.26 billion in profit for 2011 with nearly $15 billion in sales. So the error is on your side. Their trailing four quarters was closer to the $6.6 billion profit range (note that I did not say in the 4th quarter, I said the trailing four quarters). http://finance.yahoo.com/q/is?s=QCOM+Income+Statement&annual http://finance.yahoo.com/q/is?s=QCOM+Income+Statement&an... Here's Qualcomm's press release on fiscal 2012 confirming my numbers: http://files.shareholder.com/downloads/QCOM/992946673x6184273x612534/fad62ec7-8440-4f17-aad9-08e36edc1f60/Q4%2712%20ER%20Final.pdf http://files.shareholder.com/downloads/QCOM/992946673x618427... $6.11 billion in net income, with $19.12 billion in sales.
    - corin_ 14y ago
      Apologies, I misunderstood you. When you said $6.1billion you didn't specify what period that was for, and due to the proximity to their Q4 revenue ($6.02 billion) I mistakenly jumped in and assumed you were talking about their last quarter and had misread the numbers, when in actual fact you were correct we were just talking about different things. Sorry! Regardless, whether you look at the year or the quarter, the rest of my points weren't related to my thinking you had made a mistake with your numbers.
      - apapli 14y ago
        Thanks for the clarification!

by apapli 14y ago

adventured 14y ago

The companies leveraging ARM are the ones really killing it. eg Qualcomm - 100% profit growth in 24 months, to $6.1 billion ($6.6b in last four quarters). They might be the size of Intel in three or four years at this pace, and their market valuation has already passed them (the market is making a clear bet there). ARM itself is tiny by comparison. The real killing is being made by the companies leveraging ARM's designs (QCOM / AAPL / Samsung etc). I view it as akin to taking commodity energy products (which often have good margins to begin with) and leveraging into the chemicals business with extreme margins (everything from Tide to perfume to industrial chemicals).

corin_ 14y ago
A few errors in your numbers, it was $6.02 billion, and this was gross revenue not profit - profit was $1.9 billion (still 91% growth in 24 months). However, Qualcomm is more than ARM chips, so really those numbers are only semi-relevant. If Apple started making their own chips, you wouldn't attribute Apple's financial success to that alone. Based on the fact that Qualcomm's profit is ~31.7% of it's revenue (in FY12Q4) you could estimate that the profit from chip sales was closer to $1b/quarter (based on annual chip sales revenue of $12.976 billion in 2012) and then the question is how much of this is from ARM sales, which I don't have an answer to. As to their valuation passing Intel - again, this is based on more than chip sales, and Intel's market share is still almost four times that of Qualcomm currently (though this is likely to keep dropping, for sure). Personally I'm still far more keen on ARM than the manufacturers. Having factories that create chips from ARM's licenses is very different to turning commodity products into goods like perfume - in the latter it is in part about creativity and marketing (and probably patents, etc. etc.) in the former it is much more about economy of scale, efficiency, etc. What would it take to beat Qualcomm when it comes to producing ARM chips, and can it be done - get the price lower, and yes it probably could be by someone like Texas Instruments, Samsung, event Intel if they wanted to, potentially AMD (who do want to but I think probably are too small to). How about beating ARM themselves - all of a sudden you're not just trying to out-price the same products, you have to come up with better architecture and get the world to switch over. Whole different ball game. All that said, Qualcomm are definitely in a great position, and are doing really well. But from a spectator point of view I think ARM are much more exciting, from an investor point of view I think that ARM's long-term future has more potential, and short-term they are paying out dividends per share greater than Qualcomm's total earning per share. edit: Oh, and remember that even after the decline in profit, Intel's quarterly net profit is still higher than Qualcomm's. For now. Number sources: Qualcomm FY12 Q4 http://www.ft.com/cms/s/0/089f7c6e-6b23-11e2-8017-00144feab49a.html#axzz2Qgbslvzk http://www.ft.com/cms/s/0/089f7c6e-6b23-11e2-8017-00144feab4... ARM FY12 Q4 http://online.wsj.com/article/SB10001424052970204740904577194273282374432.html http://online.wsj.com/article/SB1000142405297020474090457719... 2012 chip sales https://en.wikipedia.org/wiki/Worldwide_Top_20_Semiconductor_Sales_Leaders#Ranking_for_year_2012 https://en.wikipedia.org/wiki/Worldwide_Top_20_Semiconductor...
- adventured 14y ago
  No, Qualcomm's profit was $6.1 billion in 2012. With $19 billion in sales. It was $4.26 billion in profit for 2011 with nearly $15 billion in sales. So the error is on your side. Their trailing four quarters was closer to the $6.6 billion profit range (note that I did not say in the 4th quarter, I said the trailing four quarters). http://finance.yahoo.com/q/is?s=QCOM+Income+Statement&annual http://finance.yahoo.com/q/is?s=QCOM+Income+Statement&an... Here's Qualcomm's press release on fiscal 2012 confirming my numbers: http://files.shareholder.com/downloads/QCOM/992946673x6184273x612534/fad62ec7-8440-4f17-aad9-08e36edc1f60/Q4%2712%20ER%20Final.pdf http://files.shareholder.com/downloads/QCOM/992946673x618427... $6.11 billion in net income, with $19.12 billion in sales.
  - corin_ 14y ago
    Apologies, I misunderstood you. When you said $6.1billion you didn't specify what period that was for, and due to the proximity to their Q4 revenue ($6.02 billion) I mistakenly jumped in and assumed you were talking about their last quarter and had misread the numbers, when in actual fact you were correct we were just talking about different things. Sorry! Regardless, whether you look at the year or the quarter, the rest of my points weren't related to my thinking you had made a mistake with your numbers.
    - apapli 14y ago
      Thanks for the clarification!