Ambarella Inc (AMBA) May Lose Its GoPro Inc (GPRO) Chip Contract to QUALCOMM, Inc.(QCOM): Rumors

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The news about Qualcomm and GoPro have been in for quite a while now, let’s see if Qualcomm is able to get a deal

The Country Caller recently discussed that Apple had awarded a modem contract to Intel, for some of its iPhone 7 versions. We also told you that it will not be a very big loss for Qualcomm (NASDAQ:QCOM) as it would still be making modems for iPhone 7. Now it is rumored that Qualcomm has approached GoPro to pitch its chip for GoPro Hero camera which is due later this year.

The news is not just being rumored by the street, in fact, Ambarella CEO, Fermi Wang himself commented a few months back that Qualcomm was trying its best to get a contract by GoPro. However, he further said that his company was up for the challenge and will compete with Qualcomm. Ambarella Inc. has always prided on its better quality video chip technology, which is better than Qualcomm. GoPro, which accounts for more than 30% of Amberella’s revenues, dominates the wearable action camera market. However, it may lose its position to other competitors if it does not take measures to improve its financial position.

GoPro has not been able to produce some impressive bottom line numbers recently. The company has to ensure better cost management to portray impressive financial results. GoPro stock is currently trading near its 52-week low amid a weak outlook to investors. The wearable action camera maker’s market capitalization is just around $1.3 billion. That being said, it is perhaps the best time for Qualcomm to get GoPro on board for its low-cost chips.

GoPro is in a dilemma because of it opts for Ambarella; it would have to pay more if it prefers Qualcomm. It will be interesting to see if Qualcomm is able to win a spot for its chips in the upcoming camera as it would be a huge financial loss for Ambarella Inc. if this happens.

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