Written by Stephen Nellis and Arsheeya Bajwa
(Reuters) – Qualcomm on Wednesday expected quarterly revenue and adjusted profit to beat Wall Street expectations as it sells more and more expensive chips for Android smartphones with artificial intelligence capabilities.
Qualcomm says China's Android market, which is crucial to the company after last year's smartphone recession, is starting to recover and Chinese consumers are moving to buy more expensive devices that can support AI chatbots. Stated.
Qualcomm shares rose 4% in after-hours trading.
The company said sales to Chinese smartphone makers rose 40% in the first half of the fiscal year, showing signs of recovery in the market.
“AI will drive a lot of the silicon content in these devices because of the expected computational power to run these models,” CEO Cristiano Amon told analysts on a conference call. “There is,” he said. “Users want to buy more powerful phones that can run AI.”
Qualcomm faces competition from Huawei Technologies Co., which launched its flagship 5G smartphone last year using its own chips made by subsidiary HiSilicon. But for now, IDC analyst Phil Solis said the general trend toward more capable devices appears to be helping Qualcomm more than competing with Huawei, and the San Diego, Calif. He said it appears to be causing damage.
“China's smartphone market is recovering, with a shift towards premium smartphones, and while HiSilicon is gaining market share with the flagship Huawei smartphone, the overall market is growing, with Qualcomm in particular That's where most of our revenue comes from,” Solis said.
Qualcomm expects third-quarter revenue and adjusted earnings of $9.2 billion, or $2.25 per share, compared with analysts' estimates of $9.05 billion, or $2.25 per share, according to LSEG data. It exceeded $2.17 per dollar.
Qualcomm is the world's largest supplier of smartphone chips and counts both Apple and Samsung as customers.
Qualcomm's outlook for China's smartphone market recovery may fall short of Apple's iPhone.
Apple released earnings late Thursday, with analysts saying its quarterly sales would be the sharpest in a year as the company struggles to compete in China with Huawei and other companies that sell cheap smartphones. We expect it to decrease.
Qualcomm executives spoke of signs of recovery for Android device customers such as Oppo and Vivo, while wireless connectivity chip maker Qualvo on Wednesday forecast quarterly results that fell short of Wall Street expectations, citing weak demand from its flagship smartphone market. He predicted that the stock price would fall by more than 11 stocks. % in aftermarket transactions.
Qorvo relies more on Apple sales than Qualcomm.
Qualcomm's revenue and adjusted earnings for the fiscal second quarter ended March 24 were $9.39 billion and $2.44 per share, respectively, compared with analysts' expectations of $9.34 billion, according to LSEG data. It exceeded $2.32 million and $2.32.
Qualcomm hopes to benefit from consumer demand to upgrade their devices to run AI chatbots directly on the device rather than through a data center.
Qualcomm plans to take on Apple and release chips designed to power laptops starting this summer, but small initial sales could have a big impact on the company's third-quarter forecast. is low, analysts said.
At the midpoint, Qualcomm's chip division expects the company to report revenue of $7.8 billion in the third quarter, compared to analysts' expectations of $7.74 billion, according to LSEG data.
Qualcomm expected third-quarter patent license revenue of $1.29 billion, compared to the midpoint estimate of $1.3 billion.
Qualcomm reported chip and license revenue of $8.03 billion and $1.32 billion, respectively, for the just-ended fiscal second quarter, compared to analyst expectations, according to LSEG. They were $7.95 billion and $1.32 billion.
Qualcomm's chip business reported second-quarter handset sales of $6.18 billion, compared to expectations of $6.23 billion, according to data from Visible Alpha. Automotive and Internet of Things chip sales in the second quarter were $603 million and $1.24 billion, respectively, compared to analyst expectations of $578.9 million and $1.22 billion. .
“Overall, we see strong demand for all of the company's products,” said Creative Strategies analyst Ben Bajarin. “The auto business is particularly interesting as it continues to grow while competitors continue to struggle.”
(Reporting by Stephen Nellis in San Francisco and Arsheeya Bajwa in Bengaluru; Additional reporting by Noel Randewich in Oakland, California; Editing by Matthew Lewis)