Sterne Agee analysts Vijay Rakesh and Troy Cowdrey take a look at the semiconductor space with a focus on Qualcomm. NXP, Micron, and EMV.
We believe EMV and NFC starting to see more tailwinds with 1) PAY at its earnings noting EMV attach rate at 70% to POS versus a low penetration today and 2) China mobile with Union Pay another 2014 NFC tailwind, a positive for NXP Semiconductors NV (NASDAQ:NXPI). Also China Mobile now specifying 5-mode global LTE, a positive for Qualcomm, Inc. (NASDAQ:QCOM) versus the 3-mode LTE provided by competitor MediaTek Inc. (TPE:2454). We believe this puts Qualcomm in a very competitive position in China. Last Micron Technology, Inc. (NASDAQ:MU), we believe the earthquake was a non-event and did not cause any utility interruption in Hiroshima, Japan.
NXP Semiconductors
We believe EMV and NFC starting to see more tailwinds with 1) PAY at its earnings noting EMV attach rate in its JanQ POS terminals was 70% (versus a current U.S installed base penetration of only ~20%) showing increasing adoption versus current levels. Note PAY provides almost 50% of the EMV-enabled terminals worldwide. We believe once POS terminals are EMV enabled, there will be a push for card issuers to drive EMV-enabled cards a significant opportunity given the ~1B+ cards in the U.S. Also, 2) China Mobile we believe with new agreements early in the year with China Union Pay for NFC mobile payments could be another driver for NFC in 2014, a positive for NXP Semiconductors NV (NASDAQ:NXPI).
Qualcomm
Also China Mobile Ltd. (ADR) (NYSE:CHL) now specifying 5-mode global LTE, a positive for Qualcomm, Inc. (NASDAQ:QCOM) versus the 3-mode LTE that is compatible locally on China-TD networks only and provided by competitor Mediatek. We believe this puts Qualcomm in a very competitive position in China and in a lead position versus competitor Mediatek as 4G rolls out in China.
Micron Technology
Last Micron Technology, Inc. (NASDAQ:MU), we believe the earthquake did not cause any power or utility interruption in Hiroshima, Japan and was almost a non-event.
