Intel Corporation (INTC) Reducing Contra Revenues: Good News For QUALCOMM, Inc. (QCOM) ?


Some reports have now confirmed that Intel Corporation (NASDAQ:INTC) will be powering the upcoming new iPhone variants for the emerging Asian markets. This would be a huge dent to QUALCOMM, Inc. (NASDAQ:QCOM), which was making LTE modems for Apple. Intel Corporation (NASDAQ:INTC) has finally cut the fruit of its years-long struggle. Making LTE modems for new iPhones will not only help the company regain its lost strength in the mobile markets, it could also lead it to getting more contracts from major mobile makers.

Intel Corporation (NASDAQ:INTC) is tired of giving generous discounts and subsidies to mobile makers to  make them ditch  QUALCOMM, Inc. (NASDAQ:QCOM) or ARM for Intel Corporation (NASDAQ:INTC)’s Atom chip. The company mobile market losses bulged up to $4.2 billion. These discounts, known as contra revenues were like leeches, draining the money out of Intel’s supply chain, giving nothing in the result. But now, Intel Corporation (NASDAQ:INTC) is coming up with some alternatives to its pay-to-Play strategy. The new Sofia Chip system will also give tough time to QUALCOMM, Inc. (NASDAQ:QCOM) in the Asian markets. Intel Corporation (NASDAQ:INTC) is designing low-cost chips to attract players like Dell, Lenovo and HP.

More than 80% of the mobile market is dominated by QUALCOMM, Inc. (NASDAQ:QCOM) and Intel Corporation (NASDAQ:INTC) is nowhere to be seen. But, if the latest LTE modem deal with Apple could turn out to be a long-term endeavor for the company, this could be a decisive game-changer for Intel Corporation (NASDAQ:INTC). Intel will have to increase prices of its designs in order to deplete losses, but the company is afraid that if it cuts the costs, there is a high chance that its customers will switch to QUALCOMM, Inc. (NASDAQ:QCOM).

 As of June 30, 2014, Ken Fisher’s Fisher Asset Management owns over 18 million shares in Intel Corporation (NASDAQ:INTC).

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