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Qualcomm
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Signs of global chip shortage easing seen in Qualcomm’s bright outlook and ability to find scarce parts

  • Qualcomm is farming out production to multiple manufacturers, helping ensure supplies, but few companies have the scale to do the same
  • Android smartphones are still the chip maker’s biggest growth opportunity in handsets, CEO Cristiano Amon said

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People visit a Qualcomm booth at the Mobile World Congress (MWC) in Shanghai on February 23. Photo: Reuters
Bloomberg
For investors looking for signs that the global semiconductor shortage is near an end, Qualcomm Inc offered some solace: though problems are expected to persist until next year, the chip maker is now more adept at getting its hands on scarce parts.

Qualcomm has farmed out production of certain products to multiple manufacturers, helping ensure it has enough supplies. The moves helped the company deliver an upbeat forecast for the latest quarter, sending its shares up as much as 7.6 per cent in late trading Wednesday. 

“We do have constraints really across the board,” Chief financial officer Akash Palkhiwala said on the company’s earnings conference call. “But we feel pretty comfortable that the overall supply picture is playing out exactly as we had planned.”

Even with the challenges, the company is benefiting from the growing appetite for smartphone chips and a push into new markets. Qualcomm, the world’s largest smartphone chip maker, expects earnings of US$2.90 to US$3.10 a share in the period ending in December, well above the $2.58 predicted by Wall Street. Revenue will be US$10 billion to $10.8 billion, compared with an average estimate of US$9.73 billion.

Chief executive officer Cristiano Amon has diversified Qualcomm’s suppliers to ensure the company can get what it needs. He also has been working to lower a dependency on mobile-phone chips by selling semiconductors to automakers and other manufacturers. 

“Now we have more growth vectors than just mobile,” Amon said in an interview. “Clearly Qualcomm is no longer defined by a single market.”

Qualcomm shares climbed as high as US$149 in extended trading. They had been down 9.1 per cent this year through Wednesday’s close, trailing a 28 per cent gain by the Philadelphia Stock Exchange Semiconductor Index.

New 5G networks – a speedier wireless standard – are helping fuel sales of phone chips. Qualcomm earnings also are getting a boost from the internet of things, or IoT, the push to bring online connections and electronics to a wide range of appliances.
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