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Spreadtrum Communications, Inc (ADR) (SPRD): This Stock will Lead you to the Promised Land of Mobile Growth

Innovation counts

Spreadtrum’s focus on developing solid products is a vital cog in the company’s growth. It is focused on staying abreast with the latest technological developments and for this reason it is now focusing on its LTE chipset. The company’s first generation TD-LTE product has got off to a decent start by landing the datacard spot in China Mobile’s first 4G procurement in December last year.

China Mobile will build a TD-LTE 4G network this year, and aims to cover around 500 million customers. Thus, this early design win positions Spreadtrum for growth from the build out of the world’s largest LTE network.

Also, Spreadtrum’s latest 40nm 2.5G chip, which is aimed at feature phones in emerging markets where 3G is still not widely used, delivers high efficiency at a lower cost and size. Thus, for a big feature phone market such as India, such a chip should certainly help Spreadtrum land more design wins. Moreover, Spreadtrum is exploring new avenues and recently inked a distribution partnership with Facebook Inc (NASDAQ:FB).

Facebook will embed its mobile app directly onto the chipset through Spreadtrum’s turnkey solution in an attempt to expand its reach in emerging markets, except China. Facebook wants to benefit as much as possible from smartphone growth in regions such as India, Southeast Asia, Africa, and Latin America and it seems to have chosen the right partner to go forward.

Spreadtrum’s expertise in budget smartphones and its presence across key customers should help Facebook achieve its objective of being right at the front when customers in these regions buy their first smartphone.

Final words

Spreadtrum is quite confident of making the most out of the smartphone opportunity in China and emerging markets. Its cutting-edge products have helped it stay on top of its game, which is important considering the foray of chip giant QUALCOMM, Inc. (NASDAQ:QCOM).

Qualcomm had introduced TD-SCDMA chips last year in China, targeting both the mid and premium smartphone range from China Mobile. Moreover, Qualcomm had also scored the processor spot inside the TD-SCDMA version of the Nokia Lumia 920 this year, signaling that the company is making notable progress in the TD-SCDMA market. Hence, Spreadtrum had to live up to the challenge and it has done commendably so far.

With new products, a huge addressable market, and solid customers, Spreadtrum looks like a steal at with a trailing P/E multiple of just 9.6 times. If you’re looking to profit from smartphone growth in emerging markets, Spreadtrum looks like the perfect candidate.

The article This Stock will Lead you to the Promised Land of Mobile Growth originally appeared on Fool.com.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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