Shares in Qualcomm Inc, the biggest maker of chips that run smartphones, slipped in late trading after efforts to expand beyond its main business were hampered by chip shortages in the latest quarter.
While overall sales and profit easily topped analysts’ estimates, the company fell short of projections in certain categories, including chips for cars, the Internet of Things and radio-frequency (RF) components. The pain was partially self-inflicted: The company prioritized sales to phone makers in China during the run-up to the Lunar New Year shopping season — at the expense of other categories.
“We still have more demand than supply,” chief executive officer Cristiano Amon said in an interview. “I wish we had more supply.”
Photo: Reuters
Qualcomm’s fiscal first-quarter results sent the shares down about 2.3 percent in late trading, despite the company giving an upbeat forecast for the current period. Revenue will be US$10.2 billion to US$11 billion, Qualcomm said, compared with an average analyst estimate of US$9.59 billion. Earnings will be at least US$2.80 a share, well ahead of the US$2.48 projection.
Amon has said that the success of his tenure should be measured by Qualcomm’s progress in newer, higher-growth areas. On that front, the results were mixed last quarter. Revenue from the Internet of Things — efforts to add computing power to a wider range of devices and appliances — came in at US$1.48 billion, growing 41 percent. However, analysts had projected US$1.57 billion.
As supply improves and phone demand eases, Qualcomm will be able to satisfy more of the orders it is getting from newer customers, Amon said on a call with analysts.
Excluding certain items, overall profit was US$3.23 a share in the fiscal first quarter, compared with Wall Street’s average estimate of US$3. The company generated US$10.7 billion in revenue, topping the US$10.4 billion projection.
In the so-called RF front-end market — chips that help convert radio signals into data and voice — revenue was US$1.13 billion, short of the US$1.28 billion estimate. Sales of automotive chips were US$256 million, compared with an estimate of US$276.9 million.
For now, Qualcomm’s phone processors and modems — chips that give the devices their computer-like functions and connect them to networks — provide the biggest portion of its revenue.
Like many other chipmakers, Qualcomm outsources production to companies such as Taiwan Semiconductor Manufacturing Co (台積電) and Samsung Electronics Co. A surge in demand has left these foundries unable to keep up. Amon has said that he expects to be able to get more supply in the second half of this year.
The company is unique in the industry because a large chunk of its profit comes from technology licensing. Makers of phones pay to use Qualcomm’s technology, regardless of whether they buy its chips, because the company owns patents that cover some of the fundamentals of mobile communications.
While Apple Inc does not use Qualcomm’s Snapdragon processors, the iPhone maker buys modems that connect its handset to networks. Qualcomm’s leadership has acknowledged reports that Apple is working on its own modem, but the company has said that it does not need to be a part of the iPhone to grow.
Qualcomm said on Wednesday that Android devices — rather than Apple — fueled its sales gain in the smartphone market.
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