Qualcomm Incorporatated Is Already Taking the Lead in Another Burgeoning Market

Qualcomm is well-known for having a dominant position in smartphone-oriented chips. In fact, Strategy Analytics claims that Qualcomm's revenue share of the smartphone applications processor market came in at a whopping 54% during 2013. Interestingly enough, it looks like Qualcomm is leveraging the same kind of low-power, high-performance silicon that it designs for phones in smart watches.

AnandTech tears down the Galaxy Gear Live and the LG G Watch
Tech site AnandTech tore down both Samsung's Galaxy Gear Live smart watch as well as the LG G Watch. Though it is unclear how well these devices will ultimately sell, particularly as the underlying smart watch market is still unproven, the teardowns did reveal that Qualcomm was a big winner here.

Both the LG G Watch and the Galaxy Gear Live sported a Qualcomm APQ8026 apps processor, which is very similar to the Snapdragon 400 processor found in many smartphones today, sans the integrated cellular modem. This chip comes packed with four ARM Cortex A7 processor cores as well as a low-end variant of Qualcomm's signature Adreno graphics.


The interesting thing here is that unlike the first smart watches, which basically had very weak ARM Cortex M0 microcontroller-type processors, this is similar gear to a modern low-end smartphone. If the market for smart watches grows to be fairly sizable, then companies like Qualcomm that develop very highly integrated, power-efficient processors, should benefit quite handsomely.

Who else benefits? ARM and Taiwan Semiconductor come to mind.
If this market for wearable computing devices really takes off, then semiconductor companies exposed to the design and manufacture of the highly efficient processors required for this market will benefit. Qualcomm seems to have an early lead in delivering the final chip, but ARM seems to be poised to benefit as its CPU IP is likely to be -- as it is in smartphones -- very popular here.

Further, this processor IP is useless unless it can be built, and a company like Taiwan Semiconductor -- which builds most of Qualcomm's processors (as well as those from much of the ARM ecosystem) -- could also stand to benefit nicely as it could ultimately end up building most of the key chips for this market. Naturally the chip value going into these smart watches is probably going to be lower on a per-unit basis than what goes into a phone or a tablet, but given the right volumes, it could still be very lucrative business.

Foolish bottom line
It's encouraging to see what basically amounts to a full computer stuffed into a wrist-sized device. While in the long-run, chip companies will need more custom tailored parts for these products (especially if they're going to get the battery lives up significantly), it's really interesting to see that smart watches -- should they ultimately prove viable -- will eventually be a first-class citizen within the computing continuum.

There's a company that could be poised for even greater success in the smart watch market
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

The article Qualcomm Incorporatated Is Already Taking the Lead in Another Burgeoning Market originally appeared on Fool.com.

Ashraf Eassa owns shares of ARM Holdings. The Motley Fool owns shares of Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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