Qualcomm’s “sobering report” worsens chip outlook. Qualcomm Inc. (QCOM.O) shares fell almost 8% premarket on Thursday after the chip designer said its critical smartphone market would take longer to recover from a post-pandemic downturn.
If losses continue, the business, which supplies Apple Inc (AAPL.O) and Samsung Electronics (005930. KS), may lose $10 billion in market value.
Qualcomm’s quarterly sales projection was Wall Street’s second disappointment this week. After a gloomy forecast, AMD.O fell over 9% on Wednesday.
“While we believe investors were expecting a miss, this was admittedly a somewhat sobering report,” said Bernstein analysts, one of 13 brokerages that trimmed Qualcomm’s stock price estimates.
The business blamed the weakness on the timing of orders by a client that exclusively buys its cellular modems and China, which has not recovered from COVID-19.
Analysts referred to Apple, which will publish earnings after markets close.
“The next two quarterly estimates will be adversely impacted by Apple as this leading modem-only customer purchased modems from Qualcomm in greater volumes earlier than normal due to supply chain issues,” said Michael Walkley of Canaccord Genuity.
Analysts claimed MediaTek (2454. TW)’s high-end smartphone chip rivalry is intensifying while China remains a problem with no recovery date.
“We worry about customers mixing lower now that wafers are no longer scarce as well as increasing competition from Mediatek at the higher end,” Evercore ISI said.
Qualcomm saw promising indicators.
Qualcomm’s diversification plans were on track as automotive revenue rose 20% and the internet-of-things segment reported in-line revenues.
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