Qualcomm Inc, the biggest maker of chips that run smartphones, slid in early trading yesterday after giving a tepid revenue forecast a day earlier, underscoring concerns that tariffs would hurt demand for its products.
Revenue in the period ending in June would be US$9.9 billion to US$10.7 billion, the company said in a statement on Wednesday. The midpoint of that range was slightly below the average analyst estimate of US$10.33 billion.
The outlook renewed fears that the market for smartphones would suffer from a looming trade war. Qualcomm is seen as highly vulnerable to the fallout from tariffs threatened by the US and China.
Photo: Ritchie B. Tongo, EPA-EFE
China is the biggest market for Qualcomm’s chips, and local phone makers are many of its top customers.
“As we navigate the current macroeconomic and trade environment, we remain focused on the critical factors we can control — our leading technology road map, best-in-class product portfolio, strong customer relationships and operational efficiencies,” Qualcomm CEO Cristiano Amon said in the statement.
The shares fell more than 5 percent in premarket trading in New York yesterday following the announcement.
Qualcomm has not yet experienced any material impact from tariffs, and its Chinese customers are continuing to design products based on its chips, Amon said on a conference call with analysts.
While there has been no direct effect, the indirect fallout from tariffs cannot currently be predicted, Qualcomm chief financial officer Akash Palkhiwala said.
Earnings in the June quarter would be about US$2.70 a share, excluding some items, Qualcomm said. That compares with a Wall Street projection of US$2.64.
The San Diego-based company has projected that the smartphone market would grow by a percentage in the low single digits this year.
In the March quarter, profit was US$2.85 a share, excluding some items. Revenue rose 17 percent to US$11 billion. Analysts had estimated earnings of US$2.81 a share and sales of US$10.6 billion.
Phone-related sales were US$6.93 billion, compared with the average projection of US$6.8 billion. Revenue of chips used in vehicles was US$959 million. Connected-device semiconductor sales were US$1.58 billion.
Qualcomm supplies processors and modems that are the main components of the world’s most advanced smartphones. While that market is no longer growing as quickly as it once did, the company’s products are widely used in high-end Android phones.
The chipmaker also collects fees calculated as a percentage of the cost of a handset regardless of whether the phone maker uses its chips.
Under Amon, Qualcomm has been trying to reduce its reliance on the phone market with a push into new areas. That includes selling chips to automakers and offering new processors that it says are the best foundation for new artificial intelligence laptops.
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