If you're at all interested in the Chinese smartphone market, you need to know Spreadtrum Communications.
Spreadtrum is the far-and-away market leader in radio chips for the TD-SCDMA wireless standard. TD-SCDMA is the 3G technology used by local market leader China Mobile.
That telecom titan has more than 43 million 3G subscribers today, ahead of rivals China Unicom at 30 million and China Telecom with about 29 million high-speed subscribers. Both of these rivals use the competing WCDMA 3G technology.
To put these numbers into perspective, Verizon currently sports about 34 million high-speed 3G and 4G subscribers and AT&T has 36 million of those vaunted accounts. Oh, and the American networks have already pushed 3G contracts or better to at least 39% of their customers, while China Mobile has only achieved 6.8% penetration so far. Another 590 million subscribers are still using "dumb" phones and slower network connections. There's a truly massive untapped market here -- and Spreadtrum claims a better-than-50% market share in TD-SCDMA radio chips.
Sales in the third quarter nearly doubled year over year to $185 million. Non-GAAP earnings also gained 93% to land at $0.83 per American depositary share. The company is buying back shares at a furious pace and plans to double the dividend payout in the coming quarter. That's the kind of financial freedom you get from having such a dominant market position in an exploding sector.
Spreadtrum belongs on your Foolish watchlist if you have any interest at all in Chinese telecommunications. Just click here to ensure a steady flow of news and Foolish analysis on the company.
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