Post Content Qualcomm is working to break into the booming data center chip market, which it will start shipping products for before the end of the year. (Image: reuters)
Qualcomm forecast third-quarter results below expectations, but CEO Cristiano Amon’s upbeat comments on a recovery in its core smartphone business and data center opportunities pushed its shares up 15% in extended trading.
In an interview with Reuters, Amon said the chipmaker was confident that the smartphone market will start to rebound after its fiscal third quarter.
“We can now call the bottom,” Amon said, adding that the company’s licensing business, which beat estimates, gives it insights into smartphone makers’ plans for later in the year.
Qualcomm has faced extreme uncertainty from smartphone makers this year, as a surge in prices of memory chips has also led to increases in smartphone and PC costs, prompting customers to cut back on purchases.
The company said on Wednesday it expected revenue of between $9.2 billion and $10 billion for the current quarter, a range entirely below estimates of $10.27 billion, according to data compiled by LSEG.
Qualcomm, one of the largest smartphone semiconductor firms in the world, counts as customers major players such as Apple and Samsung, as well as Chinese phone brands.
The company’s significant exposure to consumer electronics – supplying chips for wireless headphones, smartphones and automotive systems – makes its results a barometer of market health and a gauge of demand and supply dynamics.
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Qualcomm forecast third-quarter adjusted profit of between $2.10 and $2.30 per share, compared with estimates of $2.45.
Qualcomm is working to break into the booming data center chip market, which it will start shipping products for before the end of the year.
Amon said on Wednesday the company is working with customers on three kinds of chips: central processing units (CPUs), accelerators for inference, and custom chips called ASICs, a booming market for rivals such as Broadcom and Marvell .
“We have engagement on a custom ASIC, which is what we wanted to do when we bought AlphaWave,” Amon said, “and now we have a lot of connectivity (intellectual property) that enables us to do that. We’re executing on all three” categories of chips. Qualcomm bought AlphaWave, which designs semiconductor tech parts, last year in a $2.4 billion deal.
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Cloud providers have been buying large quantities of CPUs as they shift from training AI models to deploying them, a process known as inference that requires chips to handle heavy workloads.
“They’re building from a small base, but they’re already increasing the range of options they’re bringing to data center, which suggests a maturation of their strategy and offerings,” said Bob O’Donnell, president and chief analyst at TECHnalysis Research.
The shift to the data center business comes as Samsung and Apple increasingly opt for their in-house chips.
“In terms of Apple product revenue for fiscal 27 we’ve seen sell-side models in the range of a little over $2 billion in terms of QCT product revenue in the year. And we think that’s a reasonable place to model the business,” CFO Akash Palkhiwala said on a post-earnings conference call, referring to the company’s chip segment.
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Qualcomm forecast third-quarter chip revenue of between $7.9 billion and $8.5 billion, below estimates of $8.93 billion.
