Last week, NXP Semiconductor (NASDAQ:NXPI) stock plunged to $58.41 only to snap back to the $73 range a few days later. Qualcomm (NASDAQ:QCOM) was set to buy NXP a few years ago. With the economy shrinking rapidly, its failure to gain the approval of the deal is a blessing.
Qualcomm continues to dominate the modem and smartphone chip processor space with its Snapdragon platform. Even more compelling is the CEO commenting on CNBC. CEO Steve Mollenkoph said that demand in China already returned to normal. And while giants like Boeing (NYSE:BA) and Ford (NYSE:F) canceled their dividends, Qualcomm said its dividend is sustainable. And unlike AT&T (NYSE:T), the firm is opportunistic on buying back its shares.
Qualcomm is deeply undervalued again. The company is in a good position to take advantage of the market’s plunge by buying shares at lower prices. Why Boeing and AT&T could not buy the stock after a sharp drop is a disappointment. Qualcomm may weather the severe demand decline that other semiconductor firms face in the months ahead. Sales of smartphone devices will slowly increase in China. Qualcomm may record improving sales and also gain market share in the quarters ahead.
With a healthy balance sheet and a moat in selling 5G modems integrated with the Snapdragon chip, Qualcomm has a bright future ahead.
Disclosure: the author owns Ford shares.
