Broadcom Corporation (BRCM), QUALCOMM, Inc. (QCOM), Intel Corporation (INTC): Why This Semiconductor Company Is in Trouble

Intel Corporation (NASDAQ:INTC), on the other hand, may be too exposed to the PC processor business, which is experiencing a massive contraction caused by a consumer shift toward tablets and smartphones. Furthermore, Intel’s 3G connectivity solutions business will suffer from the shift toward 4G. Because of a declining PC industry, the increasing popularity of ARM chips and difficult macroeconomic conditions, revenue decreased 1% in 2012 and, in the best of cases, will remain flat this year.The latest earnings call showed the chipmaker’s revenue was down 5% from the year-ago quarter.

Intel Corporation (NASDAQ:INTC)’s management is trying to renew the business as fast as possible. To take advantage of the 4G market, which is expected to grow at 47% over between 2012-2016, Intel began shipping single-mode 4G chips in early 2013.The problem is that, unlike Qualcomm’s latest chip, single-mode chips can not support old 2G and 3G networks.

Therefore, while Intel Corporation (NASDAQ:INTC) is making steady progress in penetrating more attractive markets (like the smartphone and tablet processor segment with its Atom line), a meaningful impact on sales is unlikely to happen during the next two quarters.

Final foolish thoughts

Broadcom’s core business, the mobile and wireless solutions unit, shows no signals of early improvement in sales. Competing against Qualcomm certainly won’t be easy.

Even if Broadcom manages to keep most of its current market share, margins are bound to remain low. In the absence of short-term catalysts, negative market sentiment won’t disappear, probably causing Broadcom’s share price to remain depressed. The company offers value in the very long run, but for those with a shorter time horizon, Qualcomm may be a better investment choice.

The article Why This Semiconductor Company Is in Trouble originally appeared on and is written by Adrian Campos.

Adrian Campos has no position in any stocks mentioned. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel and Qualcomm.

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