Qualcomm, the renowned chipmaker, has reported impressive fiscal first-quarter results with a significant surge in handset chip sales, signaling a potential recovery in the smartphone market. The company’s earnings per share stood at $2.75, surpassing the expected $2.37, while revenue amounted to $9.92 billion, exceeding the projected $9.51 billion. This performance has instilled optimism in the market, reflected in Qualcomm’s stock, which experienced a marginal decline of over 1% in extended trading.
During the quarter ending Dec. 24, Qualcomm’s net income surged by 24% to $2.77 billion, or $2.48 per share, compared to $2.24 billion, or $1.98 per share, in the previous year. Notably, the company witnessed a remarkable 16% year-over-year increase in handset chip shipments, reaching $6.69 billion, a positive indicator following two consecutive years of market decline.
Qualcomm’s success in the smartphone chip sector, encompassing modems and processors for high-end Android devices, has been pivotal in its continued dominance. Under the leadership of CEO Cristiano Amon, the company has expanded its chip technology to diverse markets, including PCs, automobiles, and virtual reality headsets. Despite this diversification, Qualcomm remains a prominent supplier in the smartphone industry, which has experienced a downturn over the past couple of years.
Looking ahead, Qualcomm anticipates adjusted earnings ranging from $1.73 to $1.93 per share for the current quarter, with revenue projected to fall between $8.9 billion and $9.7 billion. This outlook contrasts with the consensus expectations of earnings at $2.25 per share on $9.3 billion of revenue. Moreover, the company foresees a stabilization in the global Android market, following a corrective phase in 2023, and expects flat year-over-year handset sales.
Notably, Qualcomm’s strategic collaboration with Samsung, a major player in the smartphone industry, further solidifies its position. The utilization of Qualcomm processors in Samsung’s high-end Galaxy phones, along with a long-term partnership agreement, underscores the enduring relevance of Qualcomm’s chip technology in the smartphone domain.
Besides smartphones, Qualcomm’s Internet of Things (IoT) business, which includes chips utilized by Meta in its virtual reality headsets, experienced a 32% sales decline to $1.5 billion. This dip in sales, juxtaposed with the robust performance in the handset chip segment, highlights the diverse dynamics within Qualcomm’s business portfolio.
