Qualcomm, the world’s biggest seller of smartphone processors, gave an upbeat forecast for sales and profit in the current period, suggesting demand for handsets is increasing after a two-year slump.
Revenue in the three-month period ending in June will be US$8.8 billion (S$12 billion) to US$9.6 billion, the company said in a statement on May 1. Excluding certain items, earnings will be US$2.15 to US$2.35 a share. Analysts had projected sales of US$9.08 billion and profit of US$2.16 a share.
The outlook signals that the smartphone market has begun to bounce back, tracking with Qualcomm’s forecast that demand would gradually recover in 2024.
The company, based in San Diego in the US, also reported better-than-predicted results in the second quarter – buoyed by headway in China, where it sells technology to local phone manufacturers.
The shares rose about 3 per cent in extended trading following the announcement. They had earlier closed at US$164.11 in New York trading, a gain of 13 per cent in 2024.
Qualcomm chief executive officer Cristiano Amon has been trying to decrease reliance on phone chips by pushing into personal computers, vehicles and other markets. But Qualcomm remains heavily dependent on demand for handsets, particularly in China.
In the second quarter, which ended on March 24, profit was US$2.44 a share, excluding some items. Revenue rose 1 per cent to US$9.39 billion. Analysts had estimated profit of US$2.32 a share and sales of US$9.32 billion.
Revenue from the smartphone segment gained 1 per cent last quarter, a slowdown from the 16 per cent increase in the previous three months. But China was a bright spot, Qualcomm said.
Sales to phone-makers in that country, the biggest market for the devices, surged 40 per cent in the first half of the fiscal year, “reflecting our strong competitive positioning and recovery of demand”.
In that market, Mr Amon said that his local customers, including Xiaomi, Honor, OnePlus Technology, Oppo and Vivo, are fuelling demand. They are not losing smartphone market share to a resurgent Huawei in China, he added.
Mr Amon said that Huawei’s re-entry into the market has helped stoke interest in the Android operating system, which is often paired with Qualcomm chips.
“We have not seen signs of weakness in the Android premium market in China,” he said.
Huawei has been blacklisted by the US government, and Mr Amon pointed out that Qualcomm sells only less-advanced 4G phone parts to the company – in line with US trade restrictions. His company expects that business to wind down to nothing in 2025.
Apple, which reports earnings on May 2, and Samsung Electronics, a maker of Android-based phones, are major phone customers of Qualcomm. But Apple’s iPhone relies on Qualcomm for connectivity chips, rather than the main processor.
Qualcomm’s Internet of Things group, which creates electronics for web-connected appliances, has suffered from a glut of inventory. Revenue at that unit was down 11 per cent last quarter. Qualcomm’s automotive sales rose 35 per cent.
An additional portion of Qualcomm’s profit comes from licensing the fundamental technology that underpins all modern mobile networks. Phone manufacturers pay these fees whether they use Qualcomm-branded chips or not. BLOOMBERG
