SiRF Technology: Dominating the Global GPS Chipset Market

Mar.22.07 | About: SiRF Technology (SIRF)

SiRF Technology (SIRF) is a world leader in manufacturing “location awareness” technology based on GPS systems for handhelds, portable PCs, cell phones, music, video players and car navigation systems.

SiRF dominates the global market of GPS chipsets, as other companies with same or comparable functions are not being adopted by international GPS Portable Navigation Device brands such as TomTom and Garmin (NASDAQ:GRMN).

Cheaper alternative solutions have not been adopted by the leading brands of GPS PNDs, as they believe that customers have strong trust in the functionality of the SiRF Star III. This gives SiRF a monopoly in the rapidly growing GPS market.

SiRF had a blow out quarterly report and upbeat guidance for Q107 at the end of January.The median analyst price target is 35.00.

Overview

  • Last month, Deutsche Bank issued positive comments on SiRF Technology following results from its second top customer, TomTom. The firm said, "Importantly, the new TomTom One (100% Sirf GPS chips) became the world's best selling PND during Q4. This should alleviate some investor concern over TomTom's recent decision to adopt Global Locate into its lower priced/functionality Go product line (now 40% Sirf GPS chips)."
  • SiRf sees the mobile handset business ramping quickly, growing from under 20% of its revenue last year to overtake automotive (50% in 2006) and consumer/recreational (25% to 30%) by 2008.
  • Last month, Research in Motion (RIMM) launched the SIRFstarIII chips, which enable GPS in the BlackBerry 8800, making Sirf's top line set to grow further.
  • Comments from founder and VP of marketing:

  • "It may only overtake then in volume shipped initially, because with a billion cellphones selling globally each year, if just 10% of them start shipping with GPS, that will immediately pass in-car automotive, personal navigation devices, and consumer/recreational as the largest market"
  • "2007 is the year GPS will go more mainstream, with both the chipset integrated into the phones and new services becoming available," said Chadha.
  • SIRF's biggest competition is Qualcomm who focuses on the CDMA market, while SIRF concentrates on GSM. "We have an LBS platform with some 100 developers signed up to write apps to it, and the pre-integrated handsets will make it easier to bring the apps together on the phones," he said.
  • SIRF notes they have over 50% of the overall GPS market, also noting that "we're bigger than that in portable devices and smaller in in-car automotive, because the design cycles are longer there."
  • GSM service is used by over 2 billion people across more than 212 countries and territories, and is the most popular standard for mobile phones in the world, much larger than CDMA
  • Chart Analysis: SIRF 2-yr chart

    sirf+chart.png_

  • Chart pattern indicates a possible trend reversal
  • Relative Strength is Bullish
  • 50 day Moving Average is Bullish
  • Support at 26.50
  • Higher lows, up/down volume indicates that the stock is under accumulation
  • Bullish on balance volume
  • Should bounce higher off its 50 and 200 day moving averages
  • sirf.gif_

    Disclosure: Author has a long position in SIRF.