Qualcomm Inc, the largest maker of smartphone processors, gave a lackluster revenue forecast for the current quarter, stoking concern that component shortages will hurt consumer demand by driving prices up. The company's sales will be US$10.2 billion to US$11 billion this quarter, the company said in a statement yesterday. Profit will be about US$2.55 a share, excluding certain items. Analysts, on average, estimated revenue of US$11.2 billion and earnings of US$2.89 a share, according to data compiled by Bloomberg.
Qualcomm said that while there’s demand for high-end phones, some of its customers, particularly those in China, will be making fewer handsets than expected because they can’t get enough memory chips and the price of those components is going up. Although chief executive officer Cristiano Amon is working to transform the company into a more diversified seller of chips for cars, personal computers and data centers, the new businesses aren’t enough to make up for the shortfall in its main market.
The historic build-out of artificial intelligence (AI) infrastructure is driving the shortage of memory chips, which help computers manage data. Manufacturers of the components have concentrated on supplying AI data centers, leaving less production for phone components.
Photo: Bridget Bennett, Bloomberg
“While our near-term handsets outlook is impacted by industry-wide memory supply constraints, we are encouraged by end-consumer demand for premium and high-tier smartphones,” Amon said in the statement.
Qualcom's shares fell about 9 percent in extended trading after closing at US$148.89 in New York. The stock had declined 13 percent thus far this year.
“Industrywide, memory shortages and price increases are likely to define the overall scale of the handset industry,” Amon told analysts on a conference call. Amon said Chinese customers in particular have said they’ll build fewer phones than planned because they can’t get enough memory chips.
Last quarter's profit was US$2.78 a share when excluding some items, while sales increased 5 percent year-on-year to about US$12.3 billion, according to Qualcomm. Analysts had estimated earnings of US$3.41 a share on revenue of US$12.2 billion.
Phone-related revenue was US$7.82 billion in the period. That fell just short of analysts’ average estimate of US$7.86 billion. Internet-connected devices generated sales of US$1.69 billion, with the automotive market contributing US$1.1 billion.
Qualcomm is trying to get into the lucrative market for AI data center components and late last year announced products that will attempt to go directly up against Nvidia Corp’s dominant offerings. It has said that the first shipment of that lineup is expected next year, and the initial customer will be Humain, the AI start-up backed by the government of Saudi Arabia.
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