With Initial focus to be on improving in-vehicle infotainment and telematics experiences via advanced automotive microcontrollers, radio chips, secure vehicle access, networks and other implementations.
Further collaborations between NXP Semiconductors (NXPI, QCOM) and Geely (GELYF, GELYY) to come involving advanced driver assistance systems [ADAS], intelligent interconnected-vehicles or vehicle-to-everything [V2X] and automotive network security.
The International Consumer Electronics Show revs up today in Las Vegas.
Captivating product categories expected to receive plenty of attention include self-driving cars, 4K televisions, wireless audio, smart home systems and drones.
While tech heavweights Apple (NASDAQ:AAPL), Alphabet (GOOG, GOOGL]]) and Amazon (NASDAQ:AMZN) are the early leaders in connected home platforms, there's a host of startups and consumer product majors looking to piggyback off the trend. Chinese companies are also hoping to make a large splash at this year's tech Super Bowl with 1,300 registered as exhibitors.
Notable keynote speakers this week include Carnival (NYSE:CCL) CEO Arnold Donald, Huawei Chief Marketing Officer Richard Yu, Nissan (OTCPK:NSANY) Chairman Carlos Ghosn, Qualcomm (NASDAQ:QCOM) CEO Steve Mollenkopf and Under Armour (NYSE:UA) CEO Kevin Plank.
The broad participation is said to have SoftBank Group's (OTCPK:SFTBY +2.7%) Vision Fund at its $100B target well ahead of schedule, with capacity for further investment to remain flexible until the end of this month as demand for inclusion is cited to be robust.
Regarding the investment vehicle's strategy, deals involving technology companies focused on artificial intelligence, robotics and IoT are considered as top priority.
Taking the stage at CES 2017, Qualcomm (NASDAQ:QCOM) took the wraps off its Snapdragon 835 mobile processor, which is expected to be in devices launching in the first half of this year.
The company touted its improved battery life and smaller size, but also views it as a "connected device" chip that includes features designed to process images and sound for augmented and virtual reality.
That move's expected to speed eventual deployment, with 3GPP getting closer to an official release of the specs.
The tests will come in millimeter wave spectrum to push commercial deployments in the 28 GHz and 39 GHz bands, using 3GPP 5G NR MIMO antenna technology. Ultimately the companies expect to achieve multi-gigabit-per-second data rates, useful for emerging services like virtual reality, augmented reality and connected cloud services.
Meizu Technology has agreed to pay Qualcomm (NASDAQ:QCOM) licensing fees to settle legal battles in China, demonstrating the U.S. company can defend its intellectual property in the world's largest smartphone market.
The deal also ends similar patent conflicts in Germany, France and the U.S., the two companies said in a statement.
Considering long-term trends within the automotive sector (specifically autonomous, electric), analyst David Wong notes these "could be significant drivers of chip content growth in automobiles over the next several years."
Citing NXP Semiconductors (NXPI, QCOM) as the largest automotive semiconductor supplier globally, points out the company's expectations for its total addressable market in advanced driver assist systems [ADAS] to expand from $0.8B in the prior year to $3.5B by 2025, and its estimates for eventual $100 per vehicle Level 2 ADAS, $400 per vehicle Level 3 ADAS and $500 per vehicle Level 4 ADAS content contributions.
Further emphasizes growth in Nvidia's (NVDA +1.3%) automotive revenue, from $35M in its April 2014 quarter to nearly $127M in this year's October quarter, and that company's efforts to position its GPU-based Drive PX 2 platform among ADAS applications.
With expectations for semiconductors amid advancements in self-driving and other enhanced automobile technologies high and broad-based (Infineon Technologies, ON Semiconductor and others [courtesy of Barron's] inclusive of the note), opportunities within the segment appear set to unfold widely in coming time.
Analyst Chris Danely initiates coverage on both (Qualcomm, NXP Semiconductors), citing lack of confidence in synergies between the entities and expected integration challenges stemming from manufacturing and customer base differences, and NXP Semiconductor's Freescale acquisition.
Further considers long-term growth targets overly assertive given light licensing growth (1% CAGR over prior three years) and soft revenue growth (2% over next few years suggested) influencing royalty rates and average selling prices.
For NXP Semiconductors shares, notes trading should remain at a discount relative to the $110 takeover price given expected closure of the deal that's still a year out.
Considering upside prospect, albeit with elevated risk, heavy consolidation within the sector (25% of U.S. semiconductor acquisition in the prior year, 20% in current and 15% projected for next), "high-quality, large cap value" companies and those potentially representing M&A targets, analyst Christopher Rolland sets Positive coverage on Qualcomm (NASDAQ:QCOM) [$80 target, current price $67.19], Texas Instruments (NYSE:TXN), Cirrus Logic (NASDAQ:CRUS), Integrated Device Technology (NASDAQ:IDTI) and MaxLinear (NYSE:MXL).
Furthermore issues rating on Mobileye (NYSE:MBLY) and Xilinx (NASDAQ:XLNX) in the same report, both at Neutral.
A 39% run higher this year has put the stock near fair value, says JPMorgan's Rod Hall, downgrading Qualcomm (NASDAQ:QCOM) to Neutral from Overweight. Hall has a $70 price target, and the stock closed last night at $69.34.
Clouds ahead include consumer weakness (outside of the U.S.), India's de-monetization, and slowing smartphone demand in China.