The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.NEW YORK ( TheStreet) -- It goes without saying that 2012 so far has been the year of the chips. Names such as Qualcomm ( QCOM) and Intel ( INTC) have clearly
In particular, ARM is one very intriguing name in chip technology. For as much as an unknown as it once was, the company has come out of nowhere to cause even Intel many sleepless nights by having taken a considerable chunk out of its market share. A lot of which has had to do with its recent partnership with Microsoft ( MSFT) and in particular the
upcoming release of Windows 8. So for ARM, it is in the best position of all of the chips because not only will its technology continue to be essential in tablets and smartphone devices, but remarkably it will become equally dominant in Windows as well. Astute investors ought to be paying attention. Another name that is not immediately known but should now be at the forefront of all chip discussions is TriQuint ( TQNT) -- a company that has long been an Apple partner, of which Apple accounts for 35% of its annual $900 million revenue. TriQuint has been a staple in various iterations of both the iPhone and the iPad. At one point the stock had gained over 50% on the year. However, since reaching as high as $7.26 on March 28, it has lost 26% of its value. At current levels, taking a position in this company may not be a bad idea if coupled with realistic expectations. But depending on how you look at it, the fact that Apple accounts for over 1/3 of its revenue may be a good or a bad situation. But it certainly deserves paying attention to. While you're at it, you may want to also monitor what is going on at Atmel ( ATML). The attractive nature of this chip is that although it lacks the advantage of being inside Apple products, the company competes and has a sizeable advantage over its rivals in the non-mobile device market -- items which include microcontrollers, programmable logic devices, as well as a wide range of proprietary system-on-chips and non-volatile memory chips. From a fundamental perspective, the stock is a steal at current levels from the standpoint that it is trading below its book value.
Atmel is gaining share in several other products as well, especially in the gadget market with its line of maXTouch controllers. Those basically run the touch-screen interfaces on several devices from Nokia ( NOK) as well as Google. Another way to play Apple is to consider a position in a name such as Nvidia ( NVDA). But unlike the other names above, the company's management has not been able to fully address how it plans to secure more market share in the tablet and smart phone market. Be that as it may, I find its current status pretty intriguing. That said, I still intend on waiting for more clarity on its progress before I can become moderately bullish on its prospects. Bottom line There are several ways to play chips with many things to consider -- some presenting better advantages than others. But the underlying premise remains value and seizing an opportunity that may not be immediately apparent. There is no question that the PC decline is real and the mobile device market is on the rise. Understanding which players will be better positioned to produce market beating performances can be the difference between a thriving portfolio and one that is merely average. As Intel taught us during the rise of the PC in the early 90's, the name on the inside can be as equally dominant as the name on the outside. Remarkably, many of the outside names of the 90's no longer exist today, while Intel is still chugging away. In other words, as the smarphone and tablet players continue to battle it out for position on the outside, the safer long term play may eventually prove to be what's inside.