Qualcomm projects strong revenue, warns of trade-curb influence

Qualcomm projects strong revenue, warns of trade-curb influence is profiled by BTW Media because published evidence links it to internet infrastructure, governance, operational dependencies, or market visibility.

• Chipmaker Qualcomm forecast fourth-quarter revenue above Wall Street estimates, with a revenue range with a midpoint of $9.9 billion, higher than analysts’ average estimate of $9.71 billion.
• This optimistic forecast is based on strong demand for high-end Android devices and AI-upgraded smartphones, despite a revenue hit due to the US revoking an export licence for Huawei Technologies.

OUR TAKE
Qualcomm’s upbeat forecast underscores the robust demand for high-end Android devices and AI-enhanced smartphones. Despite US-China trade tensions and the Huawei licence revocation, the company’s diversified business strategy, including automotive and IoT sectors, positions it well for sustained growth.
–Vicky Wu, BTW reporter

What happened

Chipmaker Qualcomm forecast fourth-quarter revenue above Wall Street estimates, betting on strong demand for high-end Android devices and the need for more chips in smartphones that are receiving AI upgrades. Shares initially rose more than 5% in extended trading after the results were announced, but pared gains to trade down 1.4% after the firm flagged a revenue hit from the US revoking one of its export licences for sanctioned Chinese telecom firm Huawei Technologies.

Qualcomm’s forecast for the fourth quarter includes a revenue range with a midpoint of $9.9 billion, higher than analysts’ average estimate of $9.71 billion. The company also forecasts a fiscal fourth-quarter sales range for its core segment that sells chips to customers, with a midpoint of $8.4billion, compared with Visible Alpha estimates of $8.33 billion. For its patent-licensing segment, the forecasted fourth-quarter sales range has a midpoint of $1.45 billion, higher than analysts’ estimates of $1.37 billion.

Qualcomm’s mobile handset revenue grew 12% to $5.9 billion in the third quarter, while automotive revenue surged 87% to $811 million. Internet-of-Things (IoT) chip revenues fell 8% to $1.36 billion. The company’s entry into the automotive market is part of a strategy to reduce dependence on the smartphone market and diversify its business.

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Why it’s important

Qualcomm’s forecast highlights the resurgence in end-market demand driven by the addition of AI capabilities to smartphones, which has lifted orders for the company. Despite tighter export curbs on sharing high-end chip technology with China and growing Sino-US trade tensions, Qualcomm remains optimistic. CFO Akash Palkhiwala acknowledged the impact on revenues in both the current quarter and the first quarter of fiscal 2025, without specifying the magnitude.

Alex Rogers, president of Qualcomm’s licensing segment, confirmed that the company will continue to negotiate with Huawei. Earlier in May, Qualcomm had stated that it did not expect any chip revenue from Huawei beyond 2024 but was pursuing licensing negotiations with the Chinese firm.

Summit Insights analyst Kinngai Chan noted, “While the smartphone market end-demand has remained somewhat muted, Qualcomm is benefiting from the stronger share position in the premium-tier segment where end-market demand has been more resilient as (smartphone makers) have been slashing prices to spur demand.” Qualcomm could also benefit from higher sales of Apple iPhones in China, where Apple recently slashed iPhone prices to compete better against Huawei.