Qualcomm Q4 Revenue Drops 24%, Forecasts Strong Sales Outlook

Qualcomm, the San Diego, California-based technology giant, has reported a 24 percent decrease in its revenues for the fiscal fourth quarter, which ended on September 24, 2023.
Qualcomm 5G NR-Light Modem-RF SystemThe chip company’s revenue for the quarter stood at $8.63 billion, reflecting the ongoing challenges in the market.

A detailed breakdown of Qualcomm’s Q4 revenue reveals the following figures:

Handsets: $5,456 million (down 27 percent)

Automotive: $535 million (up 15 percent)

Internet of Things (IoT): $1,383 million (up 31 percent)

For the 12 months ending September 24, 2023, Qualcomm’s revenues fell by 19 percent to $35.82 billion, accompanied by a net income of $7,232 million. A year-long perspective on revenue highlights the following segments:

Handsets: $22,570 million (down 22 percent)

Automotive: $1,872 million (up 24 percent)

IoT: $5,940 million (down 19 percent)

However, Qualcomm has expressed optimism for the coming quarters, forecasting a current-quarter revenue range of $9.1 billion to $9.9 billion. The company’s leadership highlighted that smartphone manufacturers had largely worked through their existing inventory and were now placing fresh orders, indicating a positive shift in the market.

Research firm Canalys anticipates that the global smartphone market will witness modest growth in a cautious-looking 2024. “Smartphone vendors will close 2023 with a relatively healthier inventory level, providing space to rebuild their stock in preparation for a potential demand resurgence. Long-term market growth remains constrained by the extended replacement cycles in major markets,” Lucas Zhong, Research Analyst at Canalys, said in October.

During a conference call, Qualcomm’s Chief Executive, Cristiano Amon, commented on the improved inventory dynamics, stating, “We’re happy that the inventory dynamics that we have seen within the Android business are largely behind us right now.”

Qualcomm also acknowledged new competition in the form of Huawei Technologies, which has resumed producing its own smartphone chips after relying on Qualcomm for several years. Despite this, Amon expressed confidence that Huawei’s re-entry into the market would not adversely affect Qualcomm’s relationship with Chinese smartphone companies, Reuters news report said.

Furthermore, Chief Financial Officer Akash Palkhiwala estimated a significant 35 percent quarter-over-quarter increase in sales to Chinese smartphone customers. The company anticipates retaining a “majority share” of the chips in Samsung’s forthcoming S24 line of phones, even as it expects Samsung to use some of its own in-house chips.

While these competitive dynamics evolve, Qualcomm is poised to benefit from a broader turnaround in key consumer electronics markets. Global smartphone shipments showed signs of recovery, falling only 0.1 percent in the quarter ended September. This was attributed to strong emerging market demand and the resilience of the premium phone market.

In light of these developments, analysts see Qualcomm’s results and improved guidance for the next quarter as a promising sign. Logan Purk, an analyst at Edward Jones, noted, “For Qualcomm, it is a recovery in Android demand mostly driven by significant growth in demand from Chinese OEMs. This recovery would eventually happen but appears to have materialized sooner than expected.”

Qualcomm’s recent supply agreement with Apple, extending to 2026, and its renewed push into the laptop market with support from Microsoft further highlight the company’s strategic positioning in the technology landscape.