Qualcomm gives upbeat forecast in sign smartphone slump may be easing
Sign up now: Get ST's newsletters delivered to your inbox
Qualcomm's report offers a glimmer of hope that consumers are finally beginning to upgrade their phones again.
PHOTO: REUTERS
Follow topic:
San Francisco – Qualcomm, the largest seller of smartphone chips, gave a better than expected revenue forecast for the current quarter, indicating that the mobile phone industry’s inventory glut may finally be receding.
Sales will be US$9.1 billion (S$12.5 billion) to US$9.9 billion in the fiscal first quarter, Qualcomm said on Wednesday in a statement.
The midpoint of that range – US$9.5 billion – was well ahead of the average analyst estimate of US$9.26 billion, sending the company’s shares higher in late trading.
Wednesday’s report offers a glimmer of hope that consumers are finally beginning to upgrade their phones again.
Many shoppers – especially in China – have been holding on to existing models for longer than in the past, hurting demand for Qualcomm’s chips.
A rebound would buoy the company’s main source of revenue.
Most excess inventory has now been cleared out, and the company expects revenue from Chinese phone makers to jump 35 per cent in the current period from the preceding three months.
For now, phone demand remains slow.
Handset shipments will decrease by a percentage in the mid-to-high single digits this year compared with 2022, “which is an improvement from what we had before”, chief financial officer Akash Palkhiwala said on a conference call with analysts.
“We’ve seen stabilisation in the market,” Mr Palkhiwala said.
Some of that improvement stems from customers building up their inventory to a normal level, he said.
As promised, Qualcomm has reduced its workforce to cut expenses.
In October, the company told California regulators that it is eliminating 1,258 positions in San Diego and Santa Clara, California.
Chief executive Cristiano Amon is working to make his company less dependent on what has become a more competitive and slower-growing market.
Stepping up a long-running effort to break into personal computer components, Qualcomm unveiled a new laptop processor designed to outperform rival products from Intel and Apple.
The new Snapdragon X Elite is as much as twice as fast as a similar 12-core processor from Intel, while using 68 per cent less power, Qualcomm claims.
Mr Amon also commented on reports that Nvidia and other companies are pushing into the PC market, using chip designs from Arm Holdings – the same fundamental technology that Qualcomm uses.
That news should be seen as affirmation that Qualcomm is making the right bet, he said.
Future personal computers also will run more artificial intelligence software, something Qualcomm has anticipated in the design of its products, he said.
Qualcomm’s main product is a processor that runs many of the world’s best-known phones.
It also sells the modem chips that connect Apple’s iPhone to high-speed data networks.
An additional portion of Qualcomm’s profit comes from licensing the fundamental technology that underpins all modern mobile networks – fees that phone manufacturers pay whether they use Qualcomm-branded chips or not. BLOOMBERG
