“We’re starting to see that memory is going to define the size of the mobile market,” said Cristiano Amon, CEO of Qualcomm. While the company doesn’t purchase memory chips directly, its customers do – and their sales will be affected in the coming quarter.
For its first fiscal quarter, Qualcomm beat estimates with revenue of $12.25 billion and adjusted earnings per share (EPS) of $3.50. Analysts polled by the London Stock Exchange had predicted $12.21 billion in revenue and $3.41 EPS.
Net income was $3 billion or $2.78 per share. For comparison, the first quarter of last year saw $3.18 billion in net income or $2.83 per share.
Qualcomm’s biggest division sells smartphone chips – it reported revenue of $7.82 billion (up 3% from the previous quarter). Related to that is money brought in from licenses on Qualcomm’s intellectual property (e.g. 5G patents), which brought in $1.59 billion.
The Internet of Things division makes low power chips for industrial applications and various smart gadgets (like the Meta Ray-Ban glasses, which use the Snapdragon AR1 chip) – this division reported a 9% increase in revenue to $1.69 billion.
Then there is the automotive division, which saw its revenue grow even faster (up 15%) to $1.1 billion.
So far, so good. However, the company’s forecast for the second quarter fell below expectations – Qualcomm is predicting $10.2 to $11 billion in revenue and $2.45 to $2.65 EPS, while analysts were expecting $11.11 billion and $2.89 EPS.
The final figures will depend on the purchasing strategy of smartphone companies – rising component costs could push them to raise prices, which would affect sales. Flagship phones have bigger margins, so that segment is better-suited to ride out the memory chip shortage. And CEO Amon argues that Qualcomm is the most competitive in the flagship segment.
Finally, Qualcomm continued its stock buyback – in Q1, it purchased 15 million shares worth $2.6 billion. Additionally, it paid out $949 million in dividends ($0.89 per share).
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