Qualcomm, the world’s largest smartphone chip maker, warned about meeting demand and signaled that a global semiconductor shortage was spreading.
“The shortage in the semiconductor industry is general,” said the new CEO Cristiano Amon.
Like most chip makers, Qualcomm outsources manufacturing to companies like Taiwan Semiconductor Manufacturing Co. and Samsung Electronics. These suppliers are trying and so far cannot prepare for a strong recovery in demand. The automotive sector recently complained about this, but Qualcomm’s comments show that the problems are broader.
When the COVID-19 pandemic first broke out in early 2020, chip orders initially collapsed. But remote working and learning have fueled demand for computers, while car purchases have increased as people avoid public transportation. This, in turn, has resulted in auto and electronics manufacturers resuming their chip purchases.
Amon said orders for chips that power computers, cars, and many other Internet-connected devices are flooding the industry, which largely relies on a handful of factories in Asia. The supply should improve in the second half of 2021, he added.
Qualcomm shares fell around 6 percent in extended trading. The stock closed at $ 162.30 (approximately Rs 11,800) in New York on Wednesday, up 6.5 percent in 2021.
The company also reported quarterly results on Wednesday and issued a positive forecast. However, this has not satisfied some analysts and investors who have recently become more optimistic about Qualcomm.
Outgoing CEO Steve Mollenkopf said Qualcomm’s performance has been affected by supply shortages.
Apple, a major Qualcomm customer, said last week that sales of high-end iPhone 12 models are limited by the availability of some components. Earlier Wednesday, General Motors warned that a global semiconductor shortage would reduce production this year as the automaker plans downtime at three plants.
Qualcomm is the largest manufacturer of chips that connect smartphones to wireless networks and also supplies processors that give the devices their computer-like capabilities. For customers like Apple and Samsung, the company’s forecasts are a closely watched indicator of the health of the cellular market.
In the first quarter of the fiscal year, Qualcomm had sales of 8.24 billion US dollars (approximately 60.080 billion rupees), an increase of 62 percent over the previous year. Analysts forecast an average of $ 8.25 billion (roughly 60.160 billion rupees). Net income was $ 2.12 (approximately Rs. 154) per share. Excluding items, earnings were $ 2.17 (about Rs. 160) per share, compared to Wall Street’s average estimate of $ 2.09 (about Rs. 152).
Last month, Qualcomm said Amon would succeed Mollenkopf, who will retire in June.
© 2021 Bloomberg LP
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