Qualcomm shares rise amid signs the global glut of mobile phone chips is easing

Qualcomm had said sales will be $9.1bn to $9.9bn in its financial first quarter, well ahead of the average analyst estimate

Thu, 02 Nov, 2023 - 19:21

Ian King

Qualcomm shares jumped after the largest seller of smartphone chips gave a revenue forecast for the current quarter that indicates the mobile phone industry’s inventory glut may finally be receding. The firm has a major research and development engineering base in Ireland.

Sales will be $9.1bn (€8.5bn) to $9.9bn in its financial first quarter, Qualcomm had said, which was well ahead of the average analyst estimate. The shares rose 5% in New York trade in the latest trading session.

The earnings report offers a glimmer of hope that consumers are finally beginning to upgrade their phones again. Many shoppers — especially in China — have been holding on to existing models for longer than in the past, hurting demand for Qualcomm’s chips. A rebound would buoy the company’s main source of revenue.

Most excess inventory has now been cleared out, and the company expects revenue from Chinese phone makers to jump 35% in the current period from the preceding three months.

For now, phone demand remains slow. Handset shipments will decrease by a percentage in the mid-to-high single digits this year compared with 2022, “which is an improvement from what we had before”, chief financial officer Akash Palkhiwala said on a conference call, after revenue declined 24% to $8.63bn.

“We’ve seen stabilisation in the market,” Palkhiwala said.

Some of that improvement stems from customers building up their inventory to a normal level, he said.

In Q4, handset and connected devices revenue fell in line with what analysts had projected, while car industry revenue exceeded predictions. Handset related sales were down 27% to $5.46bn. Chips for internet-connected devices slid 31% to $1.38bn, while car industry sales jumped 15% to $535m.