Qualcomm revenue grew 5% as 5G smartphone fuels sales

Qualcomm said its revenue rose about 5 percent to $5.22 billion in the second quarter ended March 29.
Qualcomm 5G SnapdragonQualcomm sold chips at an average price of $31.8 compared with their earlier price of $23 – showing that it is benefiting from an increase in demand for high-end chips.

Research firm Strategy Analytics said global 5G smartphone shipments grew to 24.1 million in Q1 2020 as compared with 18.7 million in the full year in 2019.

Qualcomm’s chips power leading smartphones from Samsung Electronics, LG Electronics and Apple. Qualcomm’s second-quarter revenue from its licensing business stood at $1.07 billion.

Qualcomm said signed more than 85 5G license agreements and more than 45 vendors have launched or announced commercial 5G devices.

Demand for 5G smartphones was strong, particularly in China, despite the emergence of the Covid-19 epidemic. China is the leader in demand for 5G smartphones, but demand is also growing South Korea, the US and Europe, Strategy Analytics said.

Qualcomm forecast total revenue of between $4.4 billion and $5.2 billion for its third quarter.

However, the company’s outlook was in contrast to many other chipmakers, including Intel and Texas Instrument, who have either withdrawn or cut their revenue forecasts, citing the impact of the virus on demand and supply channels.

Qualcomm, the world’s biggest supplier of modem chips that connect mobile phones and other devices to data networks, said coronavirus reduced demand for handsets by about 21 percent in the second quarter from a year earlier, and forecast 30 percent reduction in handset shipment in the current quarter.

Earlier this month, Gartner cut its forecast for global semiconductor revenue in 2020, and estimated a decline of 0.9 percent compared with its previous estimate of 12.5 percent growth.

Qualcomm is expected to benefit from long-term 5G cycle and its earnings are likely to recover next year despite near-term uncertainty in smartphone demand and supply due to the coronavirus outbreak, Canacord Genuity analysts said.