The bitter trench warfare that smartphone companies have been embroiled in has been devastating for all the combatants involved. Virtually every week another major lawsuit is announced, a company settles a previous lawsuit, and regulators assault a new victim with mind boggling levels of fines. The latest offensive came just this week with Google (GOOG) striking back against the British telecom giant BT Group (BT) by filing several lawsuits claiming that BT violated various patents regarding networking and online calls, a move that seems to be in retaliation for BT's 2011 lawsuit against Google, which is still pending in a Delaware federal court. But while companies like Google and BT are being distracted by an onslaught of legal skirmishes, the producers of smartphone hardware, things like integrated circuits and processors, have been booming with success.
The following chart lists the major hardware producers for smartphones. These companies do not produce their own smartphones, but instead they produce components that are used by a variety of smartphones, such as Apple's (AAPL) iPhone or Microsoft's (MSFT) Windows Phone.
Smartphone Components Produced
Market Cap (in billions USD)
Share price increase (1 year)
ARM Holdings, plc (ARMH)
Microprocessors, integrated circuits, smart cards
Cisco Systems Inc (CSCO)
Network adapters, routing technology, mobile security
Multimedia integration, IP infrastructure, micro wave and optical transmissions
Motorola Solutions Inc (MSI)
WLAN infrastructure, advanced data capture, security applications
QUALCOMM, Inc. (QCOM)
Integrated circuits, component integration, input devices
Semiconductors, transistors, memory storage
Texas Instruments Inc. (TXN)
Microcontrollers, digital signal processors, semiconductors
Information from Reuters.com
Clearly the smartphone hardware producers have been very successful over the past year. A conclusion that the chart suggests is that the companies that focus more specifically on smartphones, such as ARM Holdings (ARMH) and Motorola Solutions (MSI) have been more successful than those that also have a significant interest in other areas, like Cisco (CSCO) and Texas Instruments (TXN). This is explained by the continued growth in demand for smartphones, which analysts believe is going to continue to get larger and larger. Cisco has predicted that the number of mobile phone users in Africa alone will be 850 million by 2017, an increase of 673% from Africa's current 110 million users.
Regardless of how the bitter legal battles between the major smartphone producers end, one thing is certain: the market will continue to expand. The popularity of a specific phone comes and goes just like the latest fashion trends. Not that long ago, the BlackBerry (BBRY) was all the rage, but just a few years later, they have become a rare sight compared to the swarms of Apple's iPhone and Nokia's (NOK) Lumia. But while the smartphone fads fluctuate before our eyes, the hardware producers remain constantly at work, but more importantly, they remain constantly profitable. Shielded from the endless slew of patent disputes, these silent but powerful giants continue to make billions in an industry that is growing at an ever increasing rate.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: Business Relationship Disclosure: Capital Traders Group is a team of proprietary trading and equity research analysts. This article was written by Chris Johnson, one of our Equity Research Interns. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned.