Wireless-chip maker Qualcomm (QCOM) late Wednesday easily beat Wall Street’s expectations for the December quarter and guided higher for the current period. But Qualcomm stock fell in extended trading.
However, Qualcomm stock fell over 8% at one point during extended trading on Wednesday before recovering to a decrease of about 2%. It rose 6.25% during trading on Wednesday before the results were released.
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.
Financial Highlights
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).
QCT, Qualcomm’s chip business, reported $8.85 billion in sales, up 35% from the same quarter last year. However, growth slowed from the 63% it reported during the same quarter last year. The growth underscores that demand for advanced microchips remains high.
Qualcomm breaks down its chip division into four categories, all of which rose during the quarter. The increase in revenue was primarily driven by a 42% rise in handset chip sales to $5.98 billion.
The San Diego-based company earned an adjusted $3.23 a share on sales of $10.7 billion in its fiscal first quarter ended Dec. 26. Analysts had expected Qualcomm earnings of $3.01 a share on sales of $10.44 billion, according to FactSet. On a year-over-year basis, Qualcomm earnings rose 49% while sales climbed 30%.
Net income in the first quarter rose to $3.69 billion (roughly Rs. 27,623 crores), or $3.23 (roughly Rs. 240) per share, from $2.51 billion (roughly Rs. 18,789 crores), 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
“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.
What’s next
For now, Qualcomm’s phone processors and modems — chips that give the devices their computer-like functions and connect them to networks — provide the biggest portion of its revenue. Sales of phone chips jumped 42% in the period, while revenue from automotive chips climbed half that rate.
Qualcomm chips are appearing more in tablets, virtual-reality headsets, and wearable devices. In industrial applications, the company’s products can be found in energy metering, warehouse logistics systems, and retail point-of-sale equipment.
Like many other chipmakers, Qualcomm outsources production to companies such as Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. A surge in demand has left these foundries unable to keep up. Amon has said that he expects to be able to get more supply in the second half of 2022.
