Qualcomm Inc and Arm Holdings PLC, two chip companies heavily dependent on the smartphone market, on Wednesday delivered earnings reports that showed an industry making a wobbly comeback.
Both companies pointed to a resurgence in demand for high-end model devices, but stopped short of signaling that the broader industry was on solid ground.
The return of consumer spending on expensive handsets, particularly in China, helped both companies’ revenue and profit top analysts’ estimates last quarter.
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Expansion into new areas also shored up results. Qualcomm and Arm are pushing deeper into computing, bringing a boost from artificial intelligence spending, while Qualcomm has made a successful foray into automotive chips.
The two companies — longtime partners that have increasingly become adversaries — are seen as bellwethers for the smartphone industry. Qualcomm is the biggest seller of the processors that power the devices, and Arm developed much of the underlying technology used by the industry.
For the coming year, Qualcomm is predicting that overall phone units would grow roughly 5 percent or less — a sign it is not anticipating a wide recovery. Many consumers are not upgrading their devices as often, a problem that has plagued much of the industry.
Arm projected revenue of US$920 million to US$970 million for the December quarter. The midpoint of that range would fall short of the US$950.9 million that analysts had estimated.
Qualcomm expects sales of US$10.5 billion to US$11.3 billion during the period. Analysts estimated US$10.5 billion on average, according to data compiled by Bloomberg. Profit, minus certain items, would be as much as US$3.05 a share, beating Wall Street projections.
The automotive market was a bright spot for Qualcomm, despite a slump in that category that has hurt other chipmakers. Revenue was up 55 percent in fiscal this year. The San Diego-based company said that it has been winning new business, helping it outshine peers.
“I think you should look at our revenue in auto less sensitive to what happens in the market, much more related to new models that are being launched,” Qualcomm chief executive officer Cristiano Amon said on a conference call with analysts. “It’s reflecting a shifting share.”
In the September quarter, Qualcomm’s profit was US$2.69 a share, excluding some items. Revenue rose 19 percent to US$10.2 billion. Analysts had estimated earnings of US$2.56 a share and sales of US$9.91 billion.
At Arm, revenue during the period rose about 5 percent to US$844 million. That compares with the US$810.9 million analysts had projected. Earnings were US$0.30 a share, excluding some items. Analysts had estimated US$0.26 on average, according to data compiled by Bloomberg.
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