(Reuters) – Qualcomm Inc on Wednesday predicts second-quarter fiscal sales and profits above Wall Street expectations, led by a wave of phone buyers around the world updating their devices for 5G network connection.
The San Diego, California-based chip designer is forecasting sales with a median of $ 7.6 billion and adjusted profit at a midpoint of $ 1.65 per share, compared to estimates of $ 7.10 billion and $ 1.57 per share , according to IBES data from Refinitiv.
Qualcomm is the world’s largest chip provider that helps mobile phones connect to cellular data networks, providing chips to Apple Inc and other mobile device manufacturers. But the company is also picking out businesses that supply chips to manufacturers such as General Motors Inc, which appeared last week to find a contract sourcing from Qualcomm, and challenging Intel Corp. with new processors for laptops and desktops.
The company has two of its newest business lines – radio frequency chipsets to help devices handle newer 5G signals and internet snippets of things for devices such as headphones – that have now become businesses. billion-dollar-per-quarter.
Cristiano Amon, president of the company that takes over as chief executive in June, said the company expects chip supplies to remain tight until the second half of the year but that demand was oversupplied on supply as competitors of Huawei Technologies Co Ltd, which largely did not use Qualcomm chips, moved in to take over the Chinese brand market share following last year’s U.S. blacklist.
“We are seeing growth of a share in a progressive top tier,” Amon said.
Steve Mollenkopf, Qualcomm’s chief executive officer, said: “If we could do more, we could sell it.”
Qualcomm is forecasting a median $ 6.25 billion in revenue for its chip industry in the second fiscal quarter, beating estimates of $ 5.62 billion, according to data from FactSet. Qualcomm predicts a sales average for its licensing industry, which has higher margins than its chip industry and generates much of its profit, of $ 1.35 billion, lower than estimates of $ 1.43 billion, according to FactSet .
The higher sales of chips – and chips with better margins – accounted for the company’s profit forecast despite falling short of estimates for its licensing business, said Akash Palkhiwala, chief executive Qualcomm finance officer, told Reuters.
“There’s a mix-up happening in our industry,” he said.
For the first fiscal quarter ended Dec. 27, Qualcomm reported adjusted sales and profit of $ 8.24 billion and $ 2.17 per share, compared to analysts’ estimates of $ 8.27 billion and $ 2.10 per share, according to data. Refinitiv. Chip and licensing revenues were $ 6.53 billion and $ 1.66 billion, respectively, compared to estimates of $ 6.51 billion and $ 1.72 billion, according to FactSet data.
Qualcomm said first-quarter sales for mobile chips were $ 4.22 billion, jumping 79% from a year earlier on the strength of the 5G phone update. Sales of radio frequency chips, a growth area for Qualcomm, rose 157% to $ 1.06 billion. Car chips sold $ 212 million, up 44% from the previous year.
Reporting with Stephen Nellis in San Francisco and Munsif Vengattil in Bengaluru; Edited by Lisa Shumaker