New Qualcomm Trial Could Provide Upside For These Semiconductor Stocks

In a new report, Sterne Agee CRT analyst Douglas Freedman discusses the market impact of QUALCOMM, Inc. (NASDAQ: QCOM)’s new commercial trial of cellular and WiFi band aggregation. According to Freedman, the move could be a bullish sign for three semiconductor stocks.

Qualcomm will be testing an aggregation of licensed cellular and unlicensed WiFi spectrum bands in coordination with Deutsche Telekom in an effort to extend coverage and increase network capacity.

“The announcement marked the world’s first commercial trial of carrier aggregation with Wi-Fi bands and further validated our thesis regarding the rising needs for next gen wireless technology (cellular+WiFi) given today’s crowded air waves,” Freedman explains.

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Since high-frequency bands have a relatively shorter data transmission range, he expects that Wi-Fi aggregation will require the deployment of small cell infrastructure, a positive for Buy-rated Analog Devices, Inc. (NASDAQ: ADI).

In addition, the trial is also bullish news for WiFi semiconductor suppliers Avago Technologies Ltd (NASDAQ: AVGO), Broadcom Corporation (NASDAQ: BRCM) and Microsemi Corporation (NASDAQ: MSCC).

Freedman expects a major upgrade cycle to the installed base of WiFi networks over the next three to five years to handle the coming surge in data traffic.

Among the stocks mentioned in the report, Freedman sees the most upside (nearly 60 percent) for Microsemi.

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