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With Apple And Others Ramping Up 5G Phones, Qualcomm Forecasts Strong First Quarter


11/06/2020


With Apple And Others Ramping Up 5G Phones, Qualcomm Forecasts Strong First Quarter
Chip maker Qualcomm Inc predicted growth of sales of 5G smart phones will reach more than half a billion units next year, partly because of the spurt brought about by  new Apple Inc iPhone 12 models while the company forecast estimate beating revenues for its fiscal first quarter.
 
The largest supplier in the world of processors for smartphones and modem chips that actually connect phones to wireless data networks, the San Diego-based company has made heavy investments in developing lucrative 5G technology in the hopes of taking advantage of the opportunity of the technology being incorporated into the mainstream in mobile phones which is a trend that the company expects will be driven up by the last month launch of Apple's first 5G iPhones.
 
In the fourth quarter, the company reported sales revenues of $4.97 billion from its chip segment, its largest by sales, compared to estimates of analysts of revenues of $4.59 billion.
 
With the company restarting supplying chips for the new iPhone 12 models to connect them to the high-speed 5G networks, the company regained its position of being the major supplier for Apple. No forecast for sale was however given by Apple for the current quarter which has forced analysts to estimate such sale of iPhones based on the sale of Qualcomm's chip used as a proxies to estimate the demand for the new iPhones.
 
However the client list for its of 5G chips extend beyond Apple as it works with a broad swath of phone makers. That has helped the company to drive up growth of its revenues and profits.
 
The contribution form the new customer, the new iPhone models, to the overall revenues of Qualcomm during the quarter was small, said Qualcomm Chief Executive Steve Mollenkopf to the media even as the launch of Apple's iPhone's was a month later than usual. Mollenkopf did not name Apple in the comment.
 
"The results we just printed really include a smaller impact than you would normally see with one of the new customers that we're ramping up, just due to timing of their launch," he said.
 
During its fiscal fourth quarter, 162 million chips capable of wireless data connections were shipped by Qualcomm compared to estimates of 155.3 million by FactSet.
 
According to analysts, the average selling price for chips was $30.9 which was higher than the previous quarter at $29.3, based on calculations of the shipments made. A part of this growth in average selling price was because of the conscious efforts of the company to pare its modem and processor chips with radio chips, resulting in higher selling prices. In the fourth quarter, the sale revenue attributable to those radio chips was almost double of the revenues from the previous quarter, to $852 million. That helped the company’s adjusted earnings per share to reach $1.45 compared to analysts’ estimates of $1.17, according to Refinitiv data.
 
"This is really the 5G story showing up in a big way in our business," Mollenkopf said.
 
(Source:www.businessworld.in)


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