for about $120 million, according to industry insider estimates quoted by
. Intrinsity makes mobile phone application processors and competes with
OMAP 4. These application processors give mobile phones and other mobile devices the computing power to run more sophisticated software and videos.
We believe the Intrinisity acquisition could benefit Apple with faster
growth, while Qualcomm could be negatively impacted as Qualcomm-based devices like
gain limited share against
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Intrinsity Makes High-Speed Mobile Processors
The iPhone 3GS has processor speeds that are currently around 600 MHz. Intrinsity's processor speeds have touched 1GHz, making it one of the fastest mobile phone processors along with Qualcomm's Snapdragon processor. In addition to high-speed processing, Intrinsity processors use less battery power, making it ideal for use in mobile devices like the iPhone where battery consumption is crucial.
iPhone Market Share Could Increase at a Faster Rate
We expect the
to increase from 2% in 2009 to around 11% by the end of the Trefis forecast period. However, faster processors with low battery consumption could lead to better performing iPhones that attract more consumers. There could be an upside of 5% to the $294 Trefis price estimate for Apple's stock if Apple's market share were to increase at a faster rate and reach about 12% by the end of the Trefis forecast period.
Qualcomm's Stock Could be Negatively Impacted
Qualcomm's Snapdragon processor has seen gradual adoption and smartphones like Google's Nexus One, LG's eXpo, and the recently-launched
are using it. However, with Apple expected to gain more market share, it could come at the expense of Qualcomm's customers who could see stagnation -- or decline -- in their market share. This will impact Qualcomm negatively as it will mean fewer sales of its Snapdragon processors.
, we explained how Snapdragon's success is important for Qualcomm to help slow declines in the company's chipset pricing. Lower-than-expected Snapdragon sales would also have a negative impact on the average amount Qualcomm earns from chipset sales.
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