Chip maker Qualcomm has given a mixed forecast for its second-quarter profits and sales, but investors are worried about its Android sales in China.
The sales outlook shows that Qualcomm’s new chips with clever features to run chatbots, image generators and other smart things on a device instead of in the cloud are popular.
Shares went up and down in after-hours trading and were down 0.8 per cent.
Qualcomm bosses told analysts on a phone call that after making many new chips for Android phones at the end of last year, they expect chip sales in China to stay the same in the current quarter. Analysts said this means Qualcomm is losing out to rivals in China.
Qualcomm expects sales and adjusted profit of £7.3 billion and £1.81 per share for the current quarter ending in March. According to data from LSEG, this is similar to what analysts expected.
Qualcomm said it has done a deal with Samsung to supply chips for its top Galaxy S24 model worldwide. But not all of Samsung’s new models will use Qualcomm chips; some will use Samsung’s chips, unlike the previous generation of phones where the South Korean firm used only Qualcomm chips.
Qualcomm faces problems from different sides, with Huawei using Qualcomm only for 4G phones because of US export bans and Taiwan’s MediaTek competing with Qualcomm’s strong position in mid- and high-end Android phones.
Summit Insights analyst Kinngai Chan said that a comparison with MediaTek results and outlook clearly shows that Qualcomm is losing market share in the Chinese Android market.
Qualcomm said Apple has extended a licensing deal until March 2027 in its patent business. Qualcomm said in September that it had signed a deal to supply Apple with chips until 2026 but noted that part of a patent deal with the iPhone maker would only end next year after a big legal fight.
Great Hill Capital analyst Thomas J. Hayes said that for Qualcomm five per cent revenue growth and 24 per cent earnings growth was good in a doubtful earnings season.
Qualcomm, based in San Diego, California, is also expanding into other markets, such as personal computers. Partners such as Dell and Lenovo are planning to launch laptops with chips that Qualcomm says are faster than Apple’s processors.
According to LSEG data, Qualcomm reported sales and adjusted profit of £7.8 billion and £2.16 per share for the quarter that ended on Dec. 24, above estimates of £7.5 billion and £1.86 per share.
Qualcomm expects sales of £6.2 billion in the second quarter in its chip business, above analyst estimates of £6.2 billion. The company also expects sales of £1 billion in its patent-licensing business, the same as analysts expected.
For the quarter that just ended, Qualcomm said chip and licensing revenues were £6.6 billion and £1.15 billion, respectively, above/below analyst estimates of £6.3 billion and £1.11 billion, according to LSEG data.
In its chip business, Qualcomm said that mobile phones made £5.3 billion in sales in the first quarter, above estimates of £5 billion, according to data from Visible Alpha. Car and Internet-of-Things chip revenues in the first quarter were £470 million and £896 million, respectively, compared with analyst estimates of £407 million and £958 million.
