The explosion in the wireless telecommunications sector has positively impacted the semiconductor space, particularly those names with exposure to chip production, as semiconductors are the basic building blocks for electronics, including cell phones and smartphones, says Craig Berger, a Managing Director at FBR Capital Markets & Co.
“Given how much chip stocks have sold off, I am now positive on the group heading into the end of the year. I am also constructive on handset-exposed chip firms, as it is one of the few real growth areas out there in the world. So it’s one of the better end markets to be exposed to, and I put wireless infrastructure in that same bucket with handsets,” he said.
Berger likes Qualcomm Incorporated (QCOM), a semiconductor manufacturer, due to its chip business where it powers one-third of the world’s cell phones, and the company also collects royalties on about half of the world’s cell phones.
“They are investing the most into R&D, and they are involved in two different businesses. They invented 3G- and 4G-cellular technologies. The sale of any 3G or 4G device will drive royalties to Qualcomm, and they also are investing a tremendous amount into the chips. That will continue as well,” he said. “Qualcomm has the only good 4G LTE chip solution now out there in the market.”
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