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Qualcomm (QCOM) Automotive Design-Win Pipeline Swells to $30B

Qualcomm Incorporated QCOM recently announced that its automotive design-win pipeline has soared to $30 billion as of Sep 22, 2022. This reflects the current estimated value of future orders within the automotive business as it aims to connect millions of devices to the ‘connected intelligent edge’.

Driven by increasing adoption of Snapdragon Digital Chassis solutions across the auto industry, the design win portfolio has improved by more than $10 billion from third-quarter fiscal 2022 tally. Qualcomm is witnessing healthy traction in EDGE networking that helps to transform connectivity in cars, business enterprises, homes, smart factories, next-generation PCs, wearables and tablets. The automotive telematics and connectivity platforms, digital cockpit, and C-V2X solutions are fueling emerging automotive industry trends such as the growth of connected vehicles, the transformation of the in-car experience and vehicle electrification.

The buyout of Veoneer, Inc. offers Qualcomm a firmer footing in the emerging market of driver-assistance technology, as it aims to extend the Snapdragon Ride Advanced Driver Assistance Systems (ADAS) portfolio. The Arriver business of Veoneer operates the dedicated software unit focused on sensor perception and drive policy, including a full stack of features and functions. It was born out of a collaborative agreement with Qualcomm and leveraged the chipmaker’s Snapdragon Ride SoC hardware to emerge as a leading ADAS solution provider in the auto industry.

With the acquisition, Qualcomm has incorporated Arriver's Computer Vision, Drive Policy and Driver Assistance assets into its ADAS portfolio to deliver an open and competitive platform for automakers to better compete with rivals within the self-driving vehicle market. This, in turn, is likely to augment its automotive business as it strives to boost revenues beyond chipmaking for the smartphone market.

The company intends to harness artificial intelligence to meet increased demands for essential products and services that are the building blocks for digital transformation in the cloud economy. Qualcomm also envisions solid growth opportunities within the mobile space, driven by its Snapdragon portfolio, which has reportedly set high standards for premium-tier Android handsets.

Qualcomm is one of the largest manufacturers of wireless chipsets based on baseband technology. The company is focusing on retaining its leadership in 5G, chipset market and mobile connectivity with several technological achievements and innovative product launches. It is likely to help users experience a seamless transition to superfast 5G networks, delivering low-power resilient multi-gigabit connectivity with unprecedented range and Qualcomm's best-in-class security. This, in turn, would further offer the flexibility and scalability needed for broad and fast 5G adoption through accelerated commercialization by OEMs.

Qualcomm is reportedly the only chipset vendor with 5G system-level solutions spanning both sub-6 and millimeter wave bands and one of the largest RF (radio frequency) front-end suppliers with design wins across all premium-tier smartphone customers. The company believes that it is on track to become the largest smartphone RF front-end supplier by revenues in the near future.

Shares of the company have lost 7.6% in the past year compared with the industry’s decline of 14.8%. We are impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock.

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A better-ranked stock in the industry is Clearfield, Inc. CLFD, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Clearfield delivered an earnings surprise of 33.9%, on average, in the trailing four quarters. Earnings estimates for the company’s current year have moved up 101.9% since September 2021. Over the past year, Clearfield has gained a solid 99.2%.

Aviat Networks, Inc. AVNW carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has been revised 13.8% upward since September 2021.

Aviat Networks pulled off a trailing four-quarter earnings surprise of 15.9%, on average. It has soared 190.6% in the past two years.

Harmonic Inc. HLIT, carrying a Zacks Rank #2, delivered an earnings surprise of 79.3%, on average, in the trailing four quarters. Earnings estimates for Harmonic for the current year have moved up 35% since September 2021.

Harmonic provides video delivery software, products, system solutions and services worldwide. With more than three decades of experience, it has revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit Internet service to consumers' homes and mobile devices. Over the past year, the stock has gained 27.4%.


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