HomeTech StoriesQualcomm Rides China Smartphone Demand to Post Record Q1 Revenue

Qualcomm Rides China Smartphone Demand to Post Record Q1 Revenue


Qualcomm posted record first-quarter revenue on Wednesday and beat Wall Street forecasts for the current quarter, boosted by strong growth in the Android business and demand from China’s handset makers.

The US chips firm forecast second-quarter revenue between $10.2 billion (roughly Rs. 76,353 crore) and $11 billion (roughly Rs. 82,341 crore), above analysts’ estimates of $9.61 billion (roughly Rs. 71,936 crore), according to IBES data from Refinitiv.

The company has benefited from the exit of Huawei from the smartphone market, which has led other Chinese phone brands — including Xiaomi, Honor, and Oppo — to turn to Qualcomm for their chip needs.

“Android is driving the growth,” Qualcomm chief financial officer Akash Palkhiwala told Reuters. In the first quarter, handset revenues rose 42 percent year-over-year to $6 billion (roughly Rs. 44,916 crore), driven by greater than 60 percent growth in revenues from Snapdragon chipsets for Android devices.

The shifting Chinese market had given Qualcomm “tremendous opportunity… and we’re capitalising on it,” said Palkhiwala.

He said during an earnings call that the second half of the fiscal 2022 year is “shaping up” like the second half of fiscal 2021, with “very strong year over-year-growth rates.”

Net income in the first quarter rose to $3.69 billion (roughly Rs. 27,623 crore), or $3.23 (roughly Rs. 240) per share, from $2.51 billion (roughly Rs. 18,789 crore), or $2.17 (roughly Rs. 162) per share, a year earlier. Palkhiwala forecasted over 30 percent of non-GAAP EPS growth in the third quarter.

Still, Qualcomm shares fell about 3 percent in after hours trading as the results were overshadowed by Facebook owner Meta’s weaker-than-expected profit and forecast.

“We think investors are somewhat concerned about possible demand pull-in and/or double ordering by its (Qualcomm’s) customers due to the industry supply constraint,” said Kinngai Chan, an analyst at Summit Insights Group.

While chip supply constraints that have crippled many industries during the pandemic continue, chief executive Cristiano Amon told the earnings call that Qualcomm has invested to make sure it is able to deliver to its customers and that supply will improve in the second half of 2022.

Revenue in the first quarter was $10.7 billion (roughly Rs. 80,103 crore), compared with analysts’ estimates of $10.42 billion (roughly Rs. 78,001 crore), according to Refinitiv IBES data. Its chip segment had first-quarter revenue of $8.85 billion (roughly Rs. 66,248 crore), above analyst expectations of $8.69 billion (roughly Rs. 65,051 crore), according to data from FactSet.

© Thomson Reuters 2022




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