No Matter Who Wins the Tablet Race, Chipmaker ARM to Benefit

The UK-based ARM Holdings, which produces chips for about 95 percent of the tablet market, would seem to be nervously biting its corporate fingernails on chatter that Apple’s supreme dominance of the sector could leave component manufacturers for competing devices high-and-dry. Instead, the company’s stock is up on analyst comments dismissing the concern.

Recently, JPMorgan Research warned investors rival tablet makers could see almost 50 percent of their devices unsold amid Apple’s dominant market position. Such talk naturally spurred worries in the component manufacturing arena potentially producing parts for devices that won’t sell. Pshaw, replied an RBS analyst Friday.

“We believe it does not really matter whether consumers buy Apple, RIM or Android tablets,” analyst Didier Scemama told investors Friday. If tablet makers cut orders due to excess inventory, the move would “create a ‘hic-up’ in the supply chain that could affect some ARM partners. Most likely this would be short-lived, in our view,” he concludes.

Wednesday, JPMorgan announced the iPad 2 could increase demand for the Apple tablet, making it even harder for competitors to gain a foothold in the market.

[Wall Street Journal]

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