The spike in the demand for smartphones and tablets brought along with it a rise in demand for the major components of these devices. While all the attention continues to be around the major players in the smartphone and tablet markets, such as Apple and Samsung; it’s worth examining the components suppliers. These companies are likely to benefit from the growth in these markets.
This company has been around for over 150 years and manufactures glass and ceramics. One of its products is Gorilla Glass that is used on iPhones and other smartphones as a cover glass. This business segment, however, isn’t this company’s largest (in terms of revenues) and accounted for only 17% of this company’s net sales in 2012. But this is a growing segment with nearly 25.3% growth in revenues in 2012 compared to 2011. This segment’s share also rose: back in 2011 the share out of total revenues was only 13.6%.
Despite these figures, the company’s total sales rose by only 1.5% in 2012; the growth in the Gorilla Glass sales was offset by the decline in demand for display technologies (LCDs, etc.). Nonetheless, this company’s sales in Gorilla Glass are likely to further grow and take a larger portion of its sales pie.
Intel Corporation (NASDAQ:INTC)
This isn’t a new company either, but it has started to penetrate the smartphones and tablets markets in recent months. The reinvention of Nokia with its Lumia smartphone is slowly taking market share. And if Nokia will be able to turn it around, Intel is likely to follow. This company’s stock hasn’t done well in 2012 and fell by 13% since January 2012 (up to date). The decision of Berkshire Hathaway to sell its position back in September, along with Intel’s lack of growth in sales – net revenues declined by 1.2% in 2012 – has led to this drop in the company’s stock. But the collaboration of Intel with other market leaders besides Nokia that include Google, Lenovo and Microsoft (see here for more) is likely to put Intel as a strong competitor of ARM in semiconductor chips.
QUALCOMM, Inc. (NASDAQ:QCOM)
This company’s stock rose by only 13.1% during 2012. But unlike the above-mentioned companies, revenues of Qualcomm spiked by nearly 28%. The company also has a very high operating profit margin of 29.3% in 2012. The company is also using its cash to for capital expenditures and other investments – in 2012 the cash flow from investing activities was $6.9 billion. Qualcomm, among other companies, manufactures chips to ARM; so the success of ARM is also reflected in the progress of Qualcomm. Finally, UMTS mobile system network is mostly based on Qualcomm’s patents. So as the usage in this system will continue to increase, this company’s revenues are also likely to augment.
