Qualcomm Forecasts 35% QoQ Growth in Q1 China Revenue

Qualcomm's November 1st projection for the first quarter (encompassing the natural period from October to December) is of particular interest to electronic component distributors. The company forecasts a sales revenue range between $9.1 billion and $9.9 billion, with a median estimate of $9.5 billion. This prediction surpasses the average analyst expectation of $9.26 billion, indicating a noteworthy resurgence in consumer smartphone upgrades and a potential alleviation of excess smartphone inventory within the industry.

Significantly, this uptick in consumer activity is largely attributed to an extended product lifecycle, particularly among Chinese consumers, resulting in an anticipated 35% revenue growth for Qualcomm in the first quarter from Chinese smartphone manufacturers, in comparison to the previous three months.

Nevertheless, it is crucial to acknowledge that the smartphone demand recovery remains gradual. Qualcomm's Chief Financial Officer, Akash Palkhiwala, has noted that smartphone shipments in 2023 are expected to exhibit a mid-to-high single-digit percentage decline compared to the previous year, signaling an improvement from prior conditions. Additionally, market stabilization is becoming evident, partly due to customers replenishing their inventory to standard levels.

Qualcomm recently disclosed its financial performance for the fourth quarter and full year, concluding on September 24, 2023. The fourth-quarter revenue reported at $8.67 billion, marking a 24% decline compared to the corresponding period in 2022. Net profit amounted to $1.489 billion, reflecting a 48% year-on-year decrease. The full-year revenue for 2023 reached $35.82 billion, registering a 19% decrease from the previous year. Net profit was $7.232 billion, signaling a 44% decline.

In the fourth quarter, Qualcomm experienced a 27% decrease in sales revenue for mobile application processors, reaching $5.46 billion. Sales of chips intended for internet-connected devices declined by 31% to $1.38 billion, while revenue from automotive-related sales increased by 15% to $535 million.

Qualcomm's projection for the current quarter anticipates a sales revenue range of $7.7 billion to $8.3 billion in its chip business, surpassing the average estimate of $7.8 billion.

Furthermore, Qualcomm has undertaken cost-cutting measures, including a reduction in its workforce, although specific details regarding the extent of the workforce reduction have not been disclosed.