Qualcomm’s Slow And Steady Quad-Core Strategy

Having already released the well-received dual-core Krait Snapdragons earlier this year, Qualcomm (NASDAQ:QCOM) is looking to amp up its multi-core offerings with the release of a quad-core mobile processor in the second half of 2012. ^[1] The company has faced significant pressure to enter the quad-core race as competitors Nvidia (NASDAQ:NVDA) and Samsung have launched their quad-core products already. However, it has resisted the temptation so far, choosing instead to focus on improving the performance of its current processors before increasing the number of cores to take on its competitors.

We believe that the quad-core race is meaningless unless there is demand for such apps that can take advantage of the extra cores. Moreover, the fact that quad-core chipsets hog more power and are more costly to have in a mobile device since they do not come integrated with a baseband chipset makes the current use of such technology limited. We therefore think Qualcomm has done the right thing by sticking to its strategy and not trying to push out a quad-core processor sooner.

See our complete analysis for Qualcomm stock here

Are quad-cores really necessary right now?

The dual-core S4 boasts of as many cores as its predecessor, the S3, but is powered by a newly designed Krait core that helps it deliver significantly higher performance. While the S4 easily beat its dual-core competitors, it also fared reasonably well when pitted against Nvidia’s Tegra 3 quad-core processors. In fact, it even beat the Tegra 3 in most benchmarks that did not require multi-core optimization, as tests performed by AnandTech showed. ^[2]

Of course, when it came to multi-threaded processes, the Tegra 3 performed better but the point here is that there are not many mobile apps in the market that take full advantage of all the four cores. Nvidia’s ploy was to gain market share by being the first to enter a new market segment and take advantage of the early affinity for faster performance processors. Qualcomm, on the other hand, is an established player in the mobile market and therefore did not need to bring out a quad-core chipset ahead of its time in the market.

This proved to be the right strategy as the dual core Krait beat quad-core processors in many light-threaded tests, and proved more than adequate for most applications available on current mobile devices. The S4 showed that a lot of optimization remained to be achieved with dual-core processors and that the customer affinity for multiple cores was misplaced. By developing an architecture that sets a new benchmark for dual-core processors, Qualcomm did the smartphone industry a huge favor by not joining the meaningless race for multiple cores. It has also ensured that when it comes out with a quad-core processor based on the same Krait platform that powers its dual-core S4, it will maintain its lead over rivals.

LTE  preference

The U.S. wireless industry shift in preference towards LTE also played a big role in Qualcomm’s decision to concentrate on its dual-core chipsets. Current technology hasn’t matured enough to help incorporate an integrated LTE radio on quad-core processors. This has caused popular LTE-capable smartphones such as the HTC One X and the Samsung Galaxy S III to come to to the U.S. without a quad-core processor. Judging the preference of LTE over quad-core capabilities in wireless carriers’ plans well, Qualcomm rightly decided to improve the performance of its dual-core chipsets that come with integrated LTE basebands instead of trying to build a quad-core processor. (see Qualcomm Gives The Wireless Industry A Reason To Celebrate)

Understand How a Company’s Products Impact its Stock Price at Trefis

1. Qualcomm is ready for quad-core ‘ARM’ race, CNET, May 11th, 2012 [↩]
2. The Qualcomm Snapdragon S4 (Krait) Preview Part II, February 22nd, 2012 [↩]