Qualcomm lowers revenue outlook due to tough biz in China

Qualcomm CEO Steve Mollenkopf today said it lowered its revenue outlook for the semiconductor business for the second half of the fiscal year due to competition in China.

As per the current estimates, Qualcomm is targeting Q2 fiscal 2015 revenue of $6.5-$7.1 billion. Expected MSM chip shipments are 220-240 million with devices sales of $69.5- $75.5 billion, said Qualcomm.

Qualcomm is now targeting fiscal 2015 revenue of $26-$28 billion against a previous target of $26.8-$28.8 billion. During 2015, it increased forecast for devices sales to $245-$270 billion from the earlier forecast of $240-$270 billion.

Meanwhile, Qualcomm said its Q1 fiscal 2015 revenue rose to $7.1 billion, while net income grew 5 percent to $2 billion.

“The growth in the market is primarily coming from a stronger view on emerging regions, which includes China, but it’s not entirely China. Other regions such as India, Middle East and Africa and some others are contributing to that as well,” said Qualcomm President Derek Aberle, during an analyst meet.

Qualcomm CEO Steve Mollenkopf

“We have lowered our revenue outlook for our semiconductor business for the second half of the fiscal year and lowered our EPS expectations. These changes reflect our revised expectations related to OEM mix, sales to a large customer and heightened competition in China,” said Steve Mollenkopf, CEO of Qualcomm.

Qualcomm expectations

The chip company has lowered its outlook for the second half of fiscal 2015 in the semiconductor business due to several factors.

The company is expecting that a shift in share among OEMs at the premium tier, which has reduced its opportunity for sales of integrated Snapdragon processors and has skewed product mix towards more modem chipsets in this tier will impact its sales.

The company is expecting that its Snapdragon 810 processor will not be in the upcoming design cycle of a large customer’s flagship device.

Qualcomm says China offers significant opportunities — with the rollout of 3G / 4G LTE multimode and challenges – due to investigation by the China National Development and Reform Commission (NDRC).

Though Qualcomm resolved its dispute with a licensee in China in the first quarter of fiscal 2015, certain licensees in China are not complying with their contractual obligations to report their sales of licensed products to the American chip vendor.

Qualcomm believes that unlicensed companies may seek to delay execution of new licenses while the NDRC investigation is ongoing.

Though Qualcomm is expecting 3G / 4G device shipments to be approximately 1.35 billion for calendar year 2014, some licensees will not report the complete 3G / 4G device shipments to the company due to the ongoing disputes.

As a result, Qualcomm estimates approximately 1.135 billion to 1.175 billion calendar year 2014 3G / 4G device shipments will actually be reported to us through the first calendar quarter of 2015.

Qualcomm expects global 3G / 4G device shipments to be approximately 1.5 billion to 1.6 billion for calendar year 2015. It is not giving guidance for fiscal 2015.

Baburajan K
[email protected]