Qualcomm’s FQ1 revenues rose 62 percent despite semiconductor supply constraints

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Qualcomm announced its fiscal fourth-quarter revenue rose 63 percent year-over-year despite the impact of the global semiconductor shortage. The firm enjoyed a significant sales spike in the holiday quarter thanks to strong demand for its 5G chipsets.

The company anticipates its market expansion will continue through the middle of this year.

However, it warned that the worldwide automotive component supply crunch could limit its output.

Qualcomm’s Phenomenal FQ1 2021 Results

Qualcomm generated $8.23 billion in the December-ending period with adjusted earnings per share (EPS) of $2.12. Its earnings last period significantly outdid the $5.07 billion in sales and $0.80 EPS in profit it made in the same period last year. It also exceeded Wall Street’s per share estimate of $2.10 while falling slightly short of its $8.27 billion intake projection.

The firm attributed its phenomenal FQ1 2021 performance to robust interest in its 5G chipsets. It counts Apple and Samsung among its chief mobile modem and processor buyers. Its near-term revenue benefited from both corporations launching new versions of their flagship handsets in recent months. Since the company’s business model involves selling components and licensing patents, it typically does well in the holiday season.

Qualcomm also experienced healthy growth in its non-core business segments.

The manufacturer’s radiofrequency (RF) product income totaled $1.06 billion, up 157 percent year-over-year. The company’s Internet of Things (IoT) revenue expanded by 48 percent annually, reaching $1.04 billion. It recorded a sharp 44 percent upswing in automotive income, but the segment’s intake suffered from the lack of vehicle part production line space.

Steven Mollenkopf, the corporation’s CEO, noted its overall FQ1 financial results could have been stronger if not for the shortfall.

Currently, the supply crunch is most seriously affecting semiconductor vendors that specialize in automotive chips. However, the post-pandemic surge in demand for new cars and personal electronics has strained the production capacity of popular foundries like Taiwan Semiconductor Manufacturing Company (TSMC).

As a result, Qualcomm joined Samsung in warning investors that the component shortage could lessen its ability to meet demand.

Qualcomm Expects Strong Sales Despite Production Headwinds

For FQ2, Qualcomm forecast earnings between $7.2 billion and $8 billion with EPS of $1.55 to $1.75. At the midpoint, the corporation’s guidance anticipates revenue growth of 44 percent and a profit increase of 66.6 percent. It expects most of its money to come from chip sales, with its license business contributing $1.25 billion to 1.45 billion.

The firm’s income projections signal that its smartphone manufacturing partners intend to move a lot of units this period.

Recent reports regarding the handset industry support the chipmaker’s confidence. The Korea Herald estimates preorders for Samsung’s S21 lineup are 15 to 20 percent higher than those of its predecessor. Similarly, investment bank JP Morgan expects Apple will ship 97 million iPhone 12s in the first half of 2021.

Qualcomm’s near-term revenue will rise if its partners hit the benchmarks that market analysts have laid out.

However, the global semiconductor shortage could prompt a major change in those projections. Mollenkopf admitted Qualcomm’s outlook had been diminished by the supply crunch, which manufacturing insiders anticipate will extend through Q2 2021. If the global crisis worsens, smartphone makers and parts vendors could experience significant contractions this year.

Nevertheless, Qualcomm’s licensing business puts it in a better position to weather the storm than its competitors. In addition, its recently introduced infotainment cockpit solutions suggest its automotive segment income will become a larger part of its financial picture once the shortage ends.

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