Silicon Motion Technology Corporation (NASDAQ: SIMO) has been a Wall Street favorite for more than a year, more than doubling in price between September and February. But today things took a very different turn and the Taiwanese chipmaker saw its shares tumble more than 7% after an analyst at Detwiler Fenton told clients that Qualcomm’s (QCOM) integrated 3G/LTE baseband processors could be a major threat.
Silicon Motion Technology sells LTE transceivers to Samsung, and thus has been seen by many investors as a good LTE-play. But Qualcomm’s baseband processors integrate transceivers, so if Samsung transitions to these it would not need SIMO’s transceivers. Of course there is no guarantee that Samsung will source baseband processors from Qualcomm for its LTE smartphones — the Korean giant makes its own LTE baseband, which it currently uses with the Silicon Motion transceivers.
In addition to LTE transceivers, Silicon Motion also make flash memory cards, USB flash drives, and solid state drives (SSDs), as well as embedded graphics processors. In the fourth quarter of 2011, transceivers represented less than a quarter of the company’s sales volume. Mobile communications products, including transceivers, accounted for 22% of the company’s $67.1 million Q4 revenue, and mobile storage products accounted for 70%.
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