FBR Deep Dives Into Global Handset Content Trends, Highlights Six Key Takeaways

In a new report, FBR analyst Christopher Rolland takes a deep dive into global handset content trends. FBR has identified six key elements to watch heading into 2016.

6 takeaways
Though the firm remains bullish overall for many of the semiconductor names under its coverage, FBR believes that handset content trends are a critical part of identifying future outperformance in the space. Here are the six takeaways from Q4 that FBR is watching:

1. Qualcomm, Inc. QCOM gained modest market share in Q4, particularly in the high-end processors space.
2. Arm Holdings plc (ADR) ARMH’s momentum continues to be weighed down by slowing 64-bit and eight-core attach rates.
3. NFC attach rates were solid in Q4 but remain weak.
4. Intel Corporation INTC showed modest improvements with Cherry Trail and SoFIA in Q4, although the majority of the growth is in tablets rather than mobile.
5. There has been a slight slowdown in the second derivative for LTE band growth, which could be a potential negative for the RF business.
6. Despite fears over the Chinese economy, handset sell-through remains “just fine.”

Qualcomm a Q4 winner
According to Rolland, Qualcomm’s share gains make it a big winner in Q4.

“While we still fear that companies such as Samsung and Huawei are utilizing their own proprietary processors in their new designs, Qualcomm won designs in ~30% of Samsung and ~60% Huawei mobile devices that came to market in 4Q15, an improvement sequentially at both OEMs,” he explains.
 

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Stock picks
Despite the strong Q4 performance, FBR maintains a Market Perform rating on Qualcomm.

The firm’s Outperform-rated semiconductor devices stocks with the most upside to their target prices are ON Semiconductor Corp ON, ARM Holdings and Avago Technologies Ltd AVGO.

Disclosure: the author holds no position in the stocks mentioned.