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Maurizio Pesce
Ambarella’s business has serious problems, as the company’s key customers are now less dependent on its products. For example, GoPro decided to create its own processor for video signal processing to install it in the latest Hero 6 Black camera with the help of Socionext. GoPro claims that development of the chip took three years.
Now that it is ready, Ambarella will partially miss the opportunity to make an impressive growth in the global video camera market, which is expected to increase by 15% in the next four years. This is bad news for Ambarella investors, since GoPro owns a significant share of the digital camera market in the US, and the update of the product line can increase this share.
Yet, this is not the only opportunity to earn, which has escaped the chip maker only recently. The manufacturer of the drones DJI Innovations also ceased to be an Ambarella customer, as the recently released Spark drone does not need the company's chip. In addition, the attractive price of Spark (only $ 499) actually means that its popularity can lead to a reduction in sales of expensive drones.
This can be a major blow for Ambarella, as it develops chips for premium-class drones. Thus, the company should not expect contracts from DJI within the next year and a half, and the proceeds from the chip segment for drones will be halved. This will inevitably affect Ambarella’s, as DJI controls 36% of the drones market worth from $ 500 to $ 1,000 in North America.
Above other things, Ambarella plans to release a chip for computer vision CV1 in 2018. Its development took four years, but won’t bring any significant help to the business. Such a long period of development led to the fact that the company began to lag behind the market.
The company believes that the computer vision chip will allow it to occupy a niche in the automotive market, but it's easier said than done. Its competitor, Intel, after acquiring the Israeli start-up Mobileye, is trying to capture as much of the market as possible for car cameras. The advantage of Intel is that it has already created an entire ecosystem of data analysis, obtained with computer vision, radar, LiDAR and other sensors, while Ambarella is just now developing a chip whose performance is yet to be proved.
Qualcomm can make a breakthrough
The litigation with Apple will definitely influence Qualcomm's results until an agreement is reached, but the chip maker began to insure against the negative consequences of this dispute, reducing its dependence on the smartphone market. Last year Qualcomm agreed to purchase NXP Semiconductors to develop business related to cars.
Upon completion, the deal will increase Qualcomm’s potential market by about 40% to $ 138 billion by 2020, as it will strengthen the company's presence in segments such as car chips and chips for safety equipment. NXP controls 14.5% of the automotive chip market, and this bridgehead will help Qualcomm take advantage of the expected increase in the number of semiconductors in the design of cars.
Unsurprisingly, Qualcomm is struggling to close this deal as soon as possible. It is reported that the company agreed to exclude some NXP patents from the deal in order to obtain the approval of the EU antitrust authority, where the deal was halted already twice. The chances of closing the deal in 2017 seemed small, but everything could change thanks to the company's last maneuver. This purchase would allow Qualcomm to become the largest supplier of automotive chips.
Qualcomm also does not want to miss the potentially profitable market of unmanned aerial vehicles. It seeks to reduce the cost of developing drones using the Snapdragon Flight Drone platform. The company sells a $ 675 drones assembly kit to those who collect them themselves, as well as hardware manufacturers who can use Qualcomm's hardware and software package to develop their own drones. The assembly kits are now sold out. Earlier this year, the company demonstrated that its unmanned aerial vehicles can move autonomously without using a global positioning system (GPS). Given this success, Qualcomm is well positioned to occupy a niche in the fast-growing market of unmanned aerial vehicles, which in the future will lead to an increase in chip shipments.
Ambarella is losing customers, while Qualcomm can increase its customer base due to the expected purchase of NXP and the development of chips for drones. In addition, investors will not have to overpay for Qualcomm, as the price-earnings ratio (PE) is below the industry average of 25. Perhaps Qualcomm is slightly undervalued compared to Ambarella. Thus, it makes sense for investors to bet on Qualcomm because of lower stock valuations and greater chances of a breakthrough in the market.
source: fool.com
Now that it is ready, Ambarella will partially miss the opportunity to make an impressive growth in the global video camera market, which is expected to increase by 15% in the next four years. This is bad news for Ambarella investors, since GoPro owns a significant share of the digital camera market in the US, and the update of the product line can increase this share.
Yet, this is not the only opportunity to earn, which has escaped the chip maker only recently. The manufacturer of the drones DJI Innovations also ceased to be an Ambarella customer, as the recently released Spark drone does not need the company's chip. In addition, the attractive price of Spark (only $ 499) actually means that its popularity can lead to a reduction in sales of expensive drones.
This can be a major blow for Ambarella, as it develops chips for premium-class drones. Thus, the company should not expect contracts from DJI within the next year and a half, and the proceeds from the chip segment for drones will be halved. This will inevitably affect Ambarella’s, as DJI controls 36% of the drones market worth from $ 500 to $ 1,000 in North America.
Above other things, Ambarella plans to release a chip for computer vision CV1 in 2018. Its development took four years, but won’t bring any significant help to the business. Such a long period of development led to the fact that the company began to lag behind the market.
The company believes that the computer vision chip will allow it to occupy a niche in the automotive market, but it's easier said than done. Its competitor, Intel, after acquiring the Israeli start-up Mobileye, is trying to capture as much of the market as possible for car cameras. The advantage of Intel is that it has already created an entire ecosystem of data analysis, obtained with computer vision, radar, LiDAR and other sensors, while Ambarella is just now developing a chip whose performance is yet to be proved.
Qualcomm can make a breakthrough
The litigation with Apple will definitely influence Qualcomm's results until an agreement is reached, but the chip maker began to insure against the negative consequences of this dispute, reducing its dependence on the smartphone market. Last year Qualcomm agreed to purchase NXP Semiconductors to develop business related to cars.
Upon completion, the deal will increase Qualcomm’s potential market by about 40% to $ 138 billion by 2020, as it will strengthen the company's presence in segments such as car chips and chips for safety equipment. NXP controls 14.5% of the automotive chip market, and this bridgehead will help Qualcomm take advantage of the expected increase in the number of semiconductors in the design of cars.
Unsurprisingly, Qualcomm is struggling to close this deal as soon as possible. It is reported that the company agreed to exclude some NXP patents from the deal in order to obtain the approval of the EU antitrust authority, where the deal was halted already twice. The chances of closing the deal in 2017 seemed small, but everything could change thanks to the company's last maneuver. This purchase would allow Qualcomm to become the largest supplier of automotive chips.
Qualcomm also does not want to miss the potentially profitable market of unmanned aerial vehicles. It seeks to reduce the cost of developing drones using the Snapdragon Flight Drone platform. The company sells a $ 675 drones assembly kit to those who collect them themselves, as well as hardware manufacturers who can use Qualcomm's hardware and software package to develop their own drones. The assembly kits are now sold out. Earlier this year, the company demonstrated that its unmanned aerial vehicles can move autonomously without using a global positioning system (GPS). Given this success, Qualcomm is well positioned to occupy a niche in the fast-growing market of unmanned aerial vehicles, which in the future will lead to an increase in chip shipments.
Ambarella is losing customers, while Qualcomm can increase its customer base due to the expected purchase of NXP and the development of chips for drones. In addition, investors will not have to overpay for Qualcomm, as the price-earnings ratio (PE) is below the industry average of 25. Perhaps Qualcomm is slightly undervalued compared to Ambarella. Thus, it makes sense for investors to bet on Qualcomm because of lower stock valuations and greater chances of a breakthrough in the market.
source: fool.com
