Qualcomm guided below analyst expectations for the current quarter and blamed a supply crunch in computer parts, especially memory. The chipmaker will raise chip prices across the board from September 1, and its shares fell in extended trading.
Qualcomm provided light guidance for current-quarter earnings on in-line revenue, blaming the ongoing supply crunch for computer parts, especially memory. Shares fell in extended trading.
The quarter itself landed close to the mark. Qualcomm posted adjusted earnings of $2.21 per share against the $2.23 expected by LSEG consensus, on revenue of $9.95 billion versus $9.67 billion estimated. MarketWatch reported that the company came up short on its bottom line and missed expectations on its guidance for the same metric.
Qualcomm answers higher input costs with price increases
Chief executive Cristiano Amon said the company is taking concrete measures to expand margins, including raising prices across the board starting on September 1 for its chips, most of which currently go to smartphone makers. He also pointed to streamlining the supply chain.
According to CNBC, Amon put it plainly: "Cost went up, prices are going to go up". Qualcomm said in its release that the semiconductor industry is seeing a broad-based increase in input costs across wafer fabrication, assembly, test, advanced packaging, memory and other materials, while management noted revenues continue to be healthy.
Handset chip sales fall 20% as buyers trade down
Handsets remain the largest slice of chip sales, but the unit is shrinking. Qualcomm reported $5.1 billion in handset chip sales, down 20% on an annual basis, which the company said reflected a bottoming in the China market.
Amon said affordability issues had made low-end and mid-priced phones less competitive, and that even premium Android phones were seeing customers look for lower prices. Consumer preference within the premium category is changing towards the lower end of the premium tier and towards last year's phone because of memory price increases, he said.
Automotive and industrial chips hold up
Away from phones, the diversification push is doing better. Qualcomm reported $1.59 billion in automotive sales and announced a chip supply deal with BMW for digital cockpit chips on Wednesday. Internet of things sales rose 9% on an annual basis to $1.83 billion.
Margins tell the harder story. Net income for the period was $2 billion, down 25% from $2.66 billion a year earlier. For the current quarter, Qualcomm expects adjusted earnings per share of between $2.05 to $2.25 on revenue between $9.7 billion and $10.5 billion, while analysts polled by LSEG were expecting $2.36 on $10.02 billion of sales.
Sources: MarketWatch (snippet-based), CNBC
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