SAN FRANCISCO (REUTERS) - Qualcomm on Wednesday (Nov 3) forecast better-than-expected profits and revenue for its current quarter on soaring demand for chips used in phones, cars and other Internet-connected devices.
The San Diego company, still the biggest supplier of chips for mobile phones, has worked to diversify its chip portfolio.
Its optimistic forecast came even as smartphone makers such as Apple have been struggling with supply chain issues and reporting uneven results.
Those global snarls have benefited Qualcomm because they have forced profit-hungry phonemakers to focus their limited supplies on their most lucrative premium handsets, the market segment where Qualcomm is strongest.
Qualcomm has also benefited from Huawei Technologies exit from the smartphone market. The Chinese firm's Android phones had used proprietary chips, but many of the handsets replacing them use Qualcomm's chips.
Following Qualcomm's forecast, the company's shares rose 3.6 per cent in after-hours trading.
Qualcomm said it expects adjusted earnings per share to grow between US$2.90 and US$3.10 for its first quarter, beating estimates of US$2.59 according to data from Refinitiv.
Qualcomm chief executive Cristiano Amon told Reuters that efforts undertaken earlier this year to secure additional chip supplies have been successful and are on track.
"It's reflected in our record Q1 guidance - it means we have supply," said Mr Amon in an interview.
During a conference call with investors, chief financial officer Akash Palkhiwala said Qualcomm expects fiscal 2022 adjusted profit growth of more than 20 per cent, compared to Wall Street estimates of 12.5 per cent growth, according to Refinitiv estimates.
The company also said it expects revenue with a midpoint of US$10.4 billion (S$14 billion) for its fiscal first quarter, which includes the holiday shopping season in the United States and Europe, compared to analyst estimates of US$9.68 billion.
The upbeat forecast could signal the easing of a global chip shortage that has hit production for a number of major Qualcomm customers, including Apple and Samsung Electronics.
Qualcomm defied broader supply chain issues, even as one of its biggest customers, Apple, missed Wall Street expectations for iPhone sales. Apple chief executive Tim Cook told Reuters that the issues were poised to grow worse on a dollar basis during the holiday shopping quarter.
Qualcomm has worked to diversify its chip manufacturing partners, which are called foundries. It is one of few chip designers that uses both Samsung Electronics and Taiwan Semiconductor Manufacturing (TSMC) to make dueling versions of its cutting-edge chips. For older technologies, it leans on a network of suppliers including TSMC, United Microelectronics Corp and China's Semiconductor Manufacturing International.
"Some have said that Qualcomm's multi-foundry approach was too complex, but now it's looking very smart," said Mr Patrick Moorhead, head of Moor Insights & Strategy.
Mr Amon told Reuters that the booming chip results were driven in large part by the Android phone market, where Qualcomm customers such as Xiaomi are snapping up former Huawei users.
The chipmaker said revenue rose 43 per cent to US$9.32 billion for the quarter ended Sept 26, compared with estimates of US$8.86 billion, according to Refinitiv data. Its chip segment had fourth-quarter revenues of US$7.73 billion, above analyst expectations of US$7.27 billion, according to data from FactSet.
For decades, Qualcomm's biggest business was selling the modem chips that connect smartphones to wireless data networks.
While that market remains its biggest, other markets such as radio-frequency chips, automotive chips and Internet-of-things chips accounted for more than US$10 billion of its US$27 billion of chip revenue in fiscal 2021.
"If 38 per cent (of chip revenue) doesn't do it, I don't know what does," Mr Amon told Reuters about the company's diversification effort.
