Qualcomm expanded its revenue by 52 percent in its fiscal second quarter thanks to robust demand for its smartphones and IoT chips. The fabless manufacturer’s diverse portfolio helped it overcome supply constraints caused by the global semiconductor shortage.
The firm believes its growth trajectory will continue throughout the year due to the wider adoption of 5G technology. It also expects OEMs competing to fill Huawei’s position in the handset marketplace to bolster its income.
Moreover, the corporation suggested that its product availability will improve by year’s end.
Diverse Portfolio, Strong Income
Qualcomm brought in $7.93 billion in the March-ending period with adjusted net income of $2.18 billion or $1.90 per share. By contrast, it made $5.2 billion with $1.01 billion or $0.88 EPS in FQ2 2020. The firm’s robust performance topped the midpoint of its outlook and Wall Street’s prediction of $7.60 billion in sales and a profit of $1.67 per share.
The chipmaker’s handset division provided most of its revenue – $4.06 billion – a 53 percent improvement year-over-year. Its expertise in mobile processor design and 5G connectivity has made its newest and most profitable hardware very desirable. It noted its flagship Snapdragon 888 platform is being used in 40 devices worldwide, and it expects to double that number soon.
However, Qualcomm’s IoT segment experienced did very well n FQ2, expanding by 71 percent to reach $1.07. That unit has brought in over $1 billion in revenue for the company in two consecutive quarters. CEO-elect Cristiano R. Amon explained increasing adoption of the technology in the industrial sector represents a “long-term growth opportunity.”
The corporation also recorded a 50 percent spike in its licensing income and double-digit expansion of its RF front-end and automotive businesses.
Qualcomm Sees Further 2021 Growth Despite Chip Shortage
Qualcomm estimates it will bring in $7.1 billion to $7.9 billion with adjusted EPS of $1.55 to $1.75 in FQ3. If the company hits the midpoint of its guidance, it will better its revenue by 53 percent and its earnings by 92 percent year-over-year.
Industry analysts believe its financial performance will be on the weaker side. On average, market watchers project it will announce sales of $7.12 billion and a profit of $1.51.
The corporation has a positive outlook for the current period because it believes the smartphone market is in a growth phase. It anticipates that consumer interest in 5G will prompt 450 million to 550 million compatible handset shipments this year. It also believes many of Huawei’s rivals will utilize its high-performance mobile chipsets to consume its market share in 2H21.
Amon acknowledged that the global semiconductor shortage had created more demand for its products than it can meet currently.
Last month, executives with Xiaomi and Realme, leading Chinese handset makers, commented that a shortfall of Qualcomm components had curtailed its device manufacturing. In addition, Reuters recently noted Samsung is having difficulties maintaining its output due to the lack of the San Diego company’s electronic parts.
However, Qualcomm believes its partnerships with multiple advanced foundries will enable its continued upward trajectory.
It also anticipates constraints on its supplies will ease up toward the end of 2021. And it forecasts Chinese wireless service providers’ building out their 5G networks will be a major revenue driver next year. Because end-market interest in its offerings is so strong, it sees even greater sales performance in 2022.
It is hard to say how the semiconductor bottleneck will affect the chipmaker’s income in the near future. But leading-edge technology and diverse catalog indicate Qualcomm’s long-term direction is toward substantial expansion.