Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Qualcomm optimistic on 5G, connected device sales as supply bottlenecks ease

EconomyJul 28, 2021 07:22PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A Qualcomm sign is shown outside one of the company's many buildings in San Diego, California, U.S., September 17, 2020. REUTERS/Mike Blake/File Photo

By Stephen Nellis

(Reuters) -Qualcomm Inc on Wednesday predicted a rise in sales of chips for 5G phones, including Apple Inc's iPhone, as the company said it had mitigated supply shortfalls that have contributed to a global chip shortage.

Qualcomm (NASDAQ:QCOM) total revenues rose 63% to nearly $8 billion, boosted by soaring sales of chips for connected devices that hit $1.4 billion.

The San Diego, California-based company is the biggest supplier of mobile phone chips in the world and the leader in 5G technology, supplying modem chips that help iPhones connect to wireless data networks and the modems and central processors for much of the Android market.

Shares were up 3.1% to $146.86 in after-market trading following the results, which could alleviate some concerns among investors about the impact of the shortage on the smart phone market, including the iPhone.

Qualcomm Chief Executive Officer Cristiano Amon told investors during a conference call that the company's efforts to secure its chips from multiple manufacturing partners were making progress bolstering supplies, with the first shipments of significant volume in the fiscal third quarter and more to come in the coming months.

"We're still on track to materially improve supply by the end of the calendar year," Amon said.

The company is also benefiting from the exit from the global smartphone market of China's Huawei Technologies Co Ltd. Huawei's flagship models did not use Qualcomm chips but its rivals, who are now snapping up market share, mostly do.

Qualcomm has boosted sales of other chips, such as radio-frequency chips that augment its 5G phone chips and whose sales have doubled in the past year. Sales are also growing for a variety of chips for cars and for "internet of things," or IoT, applications.

Qualcomm said on Wednesday it expects sales of those chips to hit $10 billion this fiscal year, up from $6 billion the previous year. The company also said it expects adjusted profits of $8.24 per share for its fiscal 2021, nearly double the year before.

Qualcomm's chip revenue forecast for the current fiscal fourth quarter had a midpoint of $7.25 billion, compared with analyst estimates of $6.83 billion, according to Refinitiv data.

CHIP SHORTAGE

Amon said even as its own bottlenecks ease as it brings on more manufacturing partners, some of Qualcomm's customers cannot find the supporting chips from other vendors that they need to make full devices.

"We continue to see strong demand in every single business outpacing supply," he said on the call.

Apple on Tuesday predicted the chip shortage would start to hit its iPhone in the fourth quarter.

On Wednesday, Qualcomm said that global sales of 5G handsets for 2021 was likely to come in at the higher end of its forecast of 450 to 550 million handsets. That means that phone makers are likely directing any chips that are in short supply toward production of their more profitable 5G devices. Apple shares (NASDAQ:AAPL) rose 0.14% in after-hours trading after Qualcomm's results.

"While there remain some parts tightness in some periphery chips in the smartphone sector, we don't think its material enough to cause any meaningful downside, as the industry will prioritize the supply for 5G instead of 4G," said Kinngai Chan, an analyst at Summit Insights Group.

Qualcomm forecast overall sales and adjusted profits with midpoints of $8.8 billion and $2.25 per share, above estimates of $8.50 billion and $2.04 per share, according to Refinitiv data.

The company predicted revenue with a midpoint of $1.55 billion from its patent licensing business, compared with analyst expectations of $1.56 billion, according to Refinitiv data.

For the fiscal third quarter ended June 27, Qualcomm said overall adjusted revenues and adjusted profits were $8 billion and $1.92 per share, higher than estimates of $7.58 billion and $1.68 per share, according to Refinitiv data.

Mobile handset chips remain Qualcomm's biggest seller, increasing 57% to hit $3.86 billion in the quarter.

"Qualcomm has done a phenomenal job in driving the 5G ecosystem. For sure it’s moving a lot faster than 4G," said Paolo Pescatore, an analyst at PP Foresight.

Sales of other chips have also been expanding, with radio frequency chips and IoT chips reaching sales of $957 million and $1.4 billion, up 114% and 83% from a year earlier, respectively.

Qualcomm optimistic on 5G, connected device sales as supply bottlenecks ease
 

Related Articles

FedEx quarterly profit falls on labor costs
FedEx quarterly profit falls on labor costs By Reuters - Sep 21, 2021

(Reuters) - U.S. delivery firm FedEx Corp (NYSE:FDX) posted a decline in quarterly profit on Tuesday, after labor costs crimped earnings growth from surging e-commerce shipping...

Adobe Earnings, Revenue Beat in Q3
Adobe Earnings, Revenue Beat in Q3 By Investing.com - Sep 21, 2021

Investing.com - Adobe (NASDAQ:ADBE) reported on Tuesday third quarter earnings that beat analysts' forecasts and revenue that topped expectations. Adobe announced earnings per...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email