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Qualcomm Inc.’s profits more than doubled in the second quarter, and executives said the chip company was significantly improving its access to foundries during a global semiconductor shortage in which capacity constraints hampered the industry.
“Given our scale, we were able to use our technology and then move it to foundries where there was some capacity available, and we have invested in it over the past few months”, Qualcomm QCOM,
CFO Akash Palkhiwala told MarketWatch in an interview. “And what you see now is the benefit of being able to leverage the capacity available from multiple vendors. ”
This advantage appeared in Qualcomm’s fiscal third quarter earnings of $ 2.03 billion, or $ 1.77 per share, compared to $ 845 million, or 74 cents per share, during the period of the year. former. Adjusted earnings, which excludes stock-based compensation expense and other items, was $ 1.92 per share, up from 86 cents per share in the prior year period.
Revenue reached $ 8.06 billion, compared to $ 4.89 billion in the previous year quarter. Wall Street analysts, however, believe revenues that exclude the investment segment of Qualcomm’s strategic initiatives. Without QSI, revenue reached $ 8 billion, up from $ 4.89 billion a year ago.
Analysts polled by FactSet had forecast a profit of $ 1.68 per share on revenue of $ 7.53 billion, based on Qualcomm’s forecast of $ 1.55 to $ 1.75 per share on revenue of 7.1 to 7.9 billion dollars.
The shares steadily traded over 2% higher in after-hours stock, following a 1.1% rise in the regular session to close at $ 142.44.
Chip companies have seen their profits and revenues rise amid the chip crisis that has plagued supply chains for months. When the COVID-19 pandemic struck, companies that make silicon wafers were inundated with customers that made chips for high-demand products like laptops and mobile devices. On the flip side, the demand for things like automobiles has plummeted, so companies that made chips for cars lost capacity and couldn’t get it back when demand for cars rebounded.
Qualcomm’s chip designs are used in cellphones, cars, and more. Access to foundries and how this would improve gross margins therefore interested analysts during the call. Managing Director Cristiano Amon, in his first earnings call as CEO, stressed that the company is on track for annual revenue of $ 10 billion from non-smartphone products.
“We have a history of being a telephone company, but over the past two years we’ve invested in and developed all of these new markets,” Qualcomm’s Palkhiwala told MarketWatch.
The majority of Qualcomm’s sales came from the traditional wireless and mobile sector, which includes 5G chips and handset sales, up 57% from a year ago to $ 3.86 billion. However, the company’s forays into diversification accounted for about a third of revenue and was its fastest growing business.
Sales of chips for RF front-end products – the crucial circuit that converts data between a device’s antenna and the data the device uses to operate – more than doubled to $ 957 million from it a year ago; Internet of Things, or IoT, products jumped 83% to $ 1.4 billion, and automotive products also gained 83% to $ 253 million, totaling $ 2.6 billion in income. The expansion into new non-telephone markets comes as more and more smart products become like phones, in that they communicate through wireless channels.
Qualcomm forecast adjusted third-quarter earnings of $ 2.15 to $ 2.35 per share on earnings of $ 8.4 billion to $ 9.2 billion, while analysts estimated $ 2.03 per share on earnings of 8.46 billion dollars.
Over the past 12 months, Qualcomm shares have risen 56%, compared to a 59% gain for the PHLX Semiconductor Index SOX,
a 37% increase in the S&P 500 SPX index,
and a gain of 42% by the highly technical Nasdaq Composite Index COMP,
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