In a discussion with Reuters, Amon expressed confidence that the smartphone market is poised for recovery following the company’s fiscal third quarter.
“We can now identify the low point,” Amon stated, noting that its licensing business, which surpassed projections, provides insights into the plans of smartphone manufacturers later in the year.
This year, Qualcomm has encountered significant uncertainty from smartphone manufacturers due to rising memory chip prices, which have contributed to higher costs for smartphones and PCs, causing consumers to reduce their purchases.
The firm announced on Wednesday that it anticipates revenue between $9.2 billion and $10 billion for the current quarter, a projection that falls below estimates of $10.27 billion, as per data collected by LSEG.
As one of the foremost semiconductor manufacturers for smartphones globally, Qualcomm serves major clients like Apple and Samsung, in addition to various Chinese smartphone brands.
The company’s notable involvement in consumer electronics—providing chips for wireless headphones, smartphones, and automotive systems—positions it as a key indicator of market health and demand-supply dynamics.
Qualcomm predicts third-quarter adjusted profits in the range of $2.10 to $2.30 per share, compared to estimates of $2.45.
DATA CENTER OPPORTUNITY
Qualcomm is aiming to penetrate the rapidly growing data center chip market, with plans to start shipping related products before year-end.
Amon mentioned that the company is collaborating with clients on three types of chips: central processing units (CPUs), inference accelerators, and custom chips known as ASICs, a segment experiencing growth among competitors like Broadcom and Marvell.
“We have a partnership on a custom ASIC, which aligns with our initial aim when we acquired AlphaWave,” Amon remarked, “and we possess substantial connectivity (intellectual property) that facilitates our efforts. We’re actively pursuing all three chip categories. Qualcomm acquired AlphaWave, which designs semiconductor technology products, last year in a $2.4 billion transaction.
Cloud service providers are purchasing significant quantities of CPUs as they transition from training AI models to deploying them, a transition referred to as inference that necessitates chips capable of managing heavy workloads.
“They’re starting from a modest foundation, but are already broadening the range of options available for data centers, indicating a maturation in their strategy and offerings,” stated Bob O’Donnell, president and chief analyst at TECHnalysis Research.
The pivot towards the data center sector comes at a time when Samsung and Apple are progressively favoring their own chip designs.
“Regarding Apple product revenue for fiscal 27, we’ve observed sell-side projections estimating over $2 billion in QCT product revenue for the year, which we consider a reasonable estimate for the business,” CFO Akash Palkhiwala mentioned during a post-earnings conference call, referring to the company’s chip division.
Qualcomm expects third-quarter chip revenue to range from $7.9 billion to $8.5 billion, falling short of estimates of $8.93 billion.
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