Qualcomm Inc on Wednesday forecast quarterly sales and adjusted profits above Wall Street estimates, with executives saying they see supply constraints easing as smartphone buyers upgrade to 5G and former Huawei Technologies Co (華為) customers migrate to Qualcomm-chip phones.
Qualcomm is the world’s biggest supplier of smartphone chips, providing key components for 5G connectivity. The San Diego, California-based company has resolved protracted legal fights with regulators and regained iPhone maker Apple Inc as a customer.
“Qualcomm is clearly benefiting from its 5G design win with Apple’s iPhone12 and other Asian smartphones’ OEMs [original equipment manufacturers],” Summit Insights Group analyst Kinngai Chan (陳金蓋), said.
Photo: Bloomberg
Honor, Huawei’s spin-off brand, has also contributed to this, he added.
Qualcomm forecast adjusted profits with a midpoint of US$1.65 per share on revenue with a midpoint of US$7.5 billion for its fiscal third quarter ending in June, compared with analysts’ expectations of US$1.52 per share on US$7.11 billion, according to Refinitiv data.
For the fiscal second quarter that ended on March 28, Qualcomm had adjusted earnings of US$1.90 per share on sales of US$7.93 billion, compared with analysts’ estimates of US$1.67 per share on US$7.62 billion, Refinitiv data showed. Wall Street estimates had been only slightly above the midpoints of Qualcomm’s own guidance of US$1.65 per share on US$7.6 billion.
Qualcomm designs chips, but relies on partners to produce them, such as Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), Samsung Electronics Co and China’s Semiconductor Manufacturing International Corp (中芯).
Qualcomm executives said the company is investing with its manufacturing partners to secure capacity, “one of the key drivers of growth of expenses between the second and third fiscal quarter,” Qualcomm chief financial officer Akash Palkhiwala said.
“Supply remains tight within the chip industry, but key chipmakers like Qualcomm [and Apple] have been able to navigate well as they are preferred customers” of chip contract manufacturers, CFRA Research senior equity analyst Angelo Zino said.
Qualcomm has been aiming to gain smartphone chip market share after US sanctions on Huawei last year all but cut off the Chinese company’s chip supplies, rendering it unable to keep making smartphones.
Qualcomm executives have said they expect much of Huawei’s previous market share to migrate to other Android phone makers that use Qualcomm’s chips.
On a call with analysts, Qualcomm said that sales of its mobile phone chips could grow by US$10 billion as Huawei exits the market.
Those gains hinge on Qualcomm’s ability to secure enough chips during a global supply crunch. Cristiano Amon, who is to take over as chief executive in the coming months, said that Qualcomm can source its most profitable chips, the flagship Snapdragon 800 series of smartphone processors, from Samsung and TSMC.
“We expect supply chain to improve significantly as we get to the end of the calendar year,” Amon said in an interview.
Qualcomm has aimed to grow its chip business and improve margins as its once-lucrative patent licensing business shrinks after some changes to its licensing practices.
‘AL SILICON ISLAND’: Tainan is the birthplace of AMD chief executive officer Lisa Su, while TSMC is building a new fab to produce 2-nanometer chips in Kaohsiung Advanced Micro Devices Inc (AMD) has chosen to locate its new research-and-development (R&D) centers in Tainan and Kaohsiung, as part of the US chip company's NT$8.64 billion (US$270.5 million) project to advance its development of cutting-edge technologies such as artificial intelligence (AI) and silicon photonics, the Ministry of Economic Affairs said yesterday. AMD’s latest investment would help to develop Taiwan into an “AI silicon island,” the ministry said in a statement after Minister of Economic Affairs J.W. Kuo (郭智輝) met AMD representatives led by David Wang (王啟尚), senior vice president of AMD’s graphics processing unit technologies and engineering, in Taipei yesterday. AMD
LATE MOVE: If a deal goes ahead, upending Shin Kong Financial’s plans, CTBC Financial would be the financial conglomerate in Taiwan with the biggest assets CTBC Financial Holding Co (中信金控) yesterday said it is seeking regulatory approval to buy Shin Kong Financial Holding Co (新光金控) on the open market, casting a last-minute shadow over Taishin Financial Holding Co’s (台新金控) bid. CTBC Financial, Taiwan’s third-largest financial conglomerate by assets, made known its intention in a stock exchange filing, just two days before Taishin Financial and Shin Kong Financial were to announce their merger through a share swap scheme. “We will supply more details over the buyout plan after the Financial Supervisory Commission [FSC] gives the go-ahead,” CTBC Financial said in the filing. The acquisition attempt, if realized, would enable
Starlux Airlines Co (星宇航空) is to lease six A321neo aircraft as it eyes expansion amid a tourism boom. The airline plans to spend about NT$2.16 billion (US$67.51 million) on each of the first three planes, which would be leased from GY Aviation Lease 2405 Co, Starlux said in a statement. The price of the other three planes is still being negotiated and would be disclosed after an agreement is signed, it said. A Starlux prospectus posted in June on the Taiwan Stock Exchange said that as of the end of May, the airline had a fleet of 22 passenger planes — 13 A321neos,
Advanced Micro Devices Inc (AMD) has agreed to buy server maker ZT Systems Inc in a cash and stock transaction valued at US$4.9 billion, adding data center technology that would bolster its efforts to challenge Nvidia Corp. ZT Systems, based in Secaucus, New Jersey, would become part of AMD’s Data Center Solutions Business Group, it said in a statement yesterday. AMD would retain the business’ design and customer teams and look to sell the manufacturing division. The deal price includes a contingent payment of US$400 million based on certain milestones. AMD shares rose 2.5 percent in premarket trading yesterday after the news. Closely