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Sony Corporation (ADR) (SNE), NXP Semiconductors NV (NXPI): This Chipmaker Could Benefit From the Smartwatch Trend

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This month could be the start of the next revolution in personal computing. With the debut of Samsung’s  Galaxy Gear and the release of Sony Corporation (ADR) (NYSE:SNE)‘s SmartWatch 2, wearable computing could finally be about to go mainstream.

While these devices could boost the bottom lines of the companies that manufacture them, chip suppliers could be a better play. In particular, NXP Semiconductors NV (NASDAQ:NXPI) could be poised to benefit.

Sony Corporation (ADR) (NYSE:SNE)

The coming wave of smart watches

Samsung will debut its smartwatch, the Galaxy Gear, later this month. Unlike its rival , Samsung has never been particularly tight-lipped about its upcoming devices. Based on various reports around the web, including one from Gigaom, Samsung’s Galaxy Gear will include NFC.

Samsung is likely hoping that the Galaxy Gear will offset sluggish demand for its high-end smartphones. Although its recent flagship, the Galaxy S4, shipped 20 million units within its first three months on the market (making it the fastest selling phone in Samsung’s history) it was not enough to satisfy analyst expectations. Samsung shares fell in July after the company posted disappointing earnings. Although Samsung is a complex company, its high-end Galaxy phones have accounted for much of its recent growth — profits at its mobile division jumped 52% last quarter from the prior year.

Sony Corporation (ADR) (NYSE:SNE), too, is looking to mobile to help turn around the company. Sony Corporation (ADR) (NYSE:SNE)’s new lineup of Xperia tablets and smartphones have been well reviewed, and although Sony remains far behind Samsung and Apple in terms of total sales, its mobile division posted a profit of $60 million last quarter — up from a loss of $28 million in the prior year.

Sony Corporation (ADR) (NYSE:SNE)’s smartwatch, its SmartWatch 2, goes on sale this month. The device is actually the second attempt the company has made at cracking the smartwatch market, although its first model was poorly reviewed and mostly ignored. The SmartWatch 2 uses NFC, as do most of Sony Corporation (ADR) (NYSE:SNE)’s other mobile devices. As Sony makes a variety of electronics, it isn’t particularly surprising that Sony Corporation (ADR) (NYSE:SNE) is extensively using the technology.

Using NFC to connect devices

NFC technology allows mobile devices to “talk” to each other. Samsung has made its use of NFC a key selling point for its phones — the “tap to share” feature Samsung features in its advertising relies on NFC.

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