Qualcomm Inc on Wednesday said that it expects 200 million 5G smartphones to be sold next year, including flagship devices launching next fall, a reference Wall Street took as a hint that Apple Inc would next year offer the faster technology.
Next-generation 5G smartphones are expected to make tasks such as watching videos or playing games on mobile networks as good as, or better than, on a Wi-Fi connection.
Once 5G networks are widely available sometime next year, Qualcomm, the world’s largest supplier of mobile phone chips, and its rivals stand to benefit, because the phones will require more chips to gain the speed boost.
Apple, a Qualcomm client, has not said when it plans to launch 5G, but Qualcomm chief financial officer Akash Palkhiwala said on an investor call that there would be “two inflection points” for 5G chips next year.
One would be in the spring, when firms such as Samsung Electronics Co and several Chinese handset makers tend to introduce new phones.
“The second inflection point will be in the fall time frame, when another set of flagship devices will adopt 5G,” Palkhiwala said.
Fall is when Apple and Alphabet Inc launch new models, and Kinngai Chan (陳金蓋) of Summit Insights Group LLC said that he expects Apple to adopt Qualcomm’s 5G modem chip for some of those devices.
Qualcomm’s 5G market estimate, disclosed during a fourth-quarter earnings report, is the first from the company.
Rivals MediaTek Inc (聯發科), Samsung and Huawei Technologies Co Ltd (華為) are also to produce 5G chips, but Qualcomm stands to reap patent licensing revenue from essentially every 5G device and sell chips for many of the most expensive handsets.
Qualcomm’s net income rose to US$506 million, or earnings per share of US$0.42, in the period ended Sept. 29 from a loss of US$513 million, or losses per share of US$0.36, a year earlier.
Excluding certain items, profit was US$0.78 a share, compared with an average estimate of US$0.71. Revenue declined 17 percent to $4.81 billion.
Analysts on average had predicted US$4.71 billion in sales.
The company gave a stronger-than-predicted forecast for this quarter, indicating that smartphone demand might be slowly picking up after a prolonged slump.
“There’s a lot of activity on 5G,” chief executive officer Steve Mollenkopf said. “The quarterly performance and the forecast reflects our confidence in the inflection point of 5G next year.”
Fiscal first-quarter revenue is expected to be US$4.4 billion to US$5.2 billion, the San Diego-based company said in a statement.
That mid-point of the estimate, US$4.8 billion, compares with an average of analysts’ projections of US$4.78 billion, according to data compiled by Bloomberg.
Profit and revenue in the fourth quarter topped estimates.
Qualcomm’s 5G devices estimate is nearly 60 percent higher than research firm International Data Corp’s forecast of 123.5 million devices and Goldman Sachs Group Inc’s 120 million.
Patrick Moorhead of Moor Insights & Strategy said that Qualcomm’s close relationship with phone makers made its number credible.
“Given Qualcomm actually has to put orders into its foundries and those numbers were provided on an investor call, I’d bank on the Qualcomm number,” he said.
However, an analyst on Qualcomm’s post-earnings call termed the estimate as “conservative,” comparing it to a 300 million estimate by Taiwan Semiconductor Manufacturing Co (台積電), which some reports have said is from a leaked internal document.
Additional reporting by Bloomberg
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