Qualcomm’s Sales Forecast Surpasses Expectations Amid Concerns Over Samsung Partnership
On Wednesday, chip designer Qualcomm (QCOM-Q) projected quarterly sales and profits exceeding market anticipations, buoyed by a resurgence in premium smartphone sales.
However, apprehensions regarding a potential downturn in business with Samsung, a vital client, catalyzed a decline in the company’s shares during after-hours trading.
As one of the foremost suppliers of modem chips that facilitate smartphone connectivity to wireless data networks, Qualcomm anticipates sales and adjusted profits of approximately $12.2 billion and $3.40 per share for the current fiscal first quarter, concluded in December.
These figures are notably higher than analyst forecasts, which estimated $11.62 billion in sales and $3.31 per share in profit, according to data from LSEG.
For Samsung Electronics’ latest Galaxy S25 models, Qualcomm provided an overwhelming 100 percent of the modem chips.
Yet, CEO Cristiano Amon indicated to Reuters that the company is bracing for a decrease in its share for Samsung’s next generation of devices.
“Regarding the Galaxy S26, we are preparing for a projected 75 percent market share,” Amon stated.
Following these announcements, Qualcomm shares experienced a 2.7 percent dip in extended trading, despite having risen nearly 4 percent in regular trading hours.
The company is also diversifying its portfolio, engaging in sectors like laptops, automobiles, and data center chips, particularly after longstanding client Apple initiated a significant transition to proprietary modems.
Amon elucidated during a conference call that Qualcomm is currently in negotiations with a major AI computing firm to supply chips.
Moreover, he noted that the favorable forecast and stronger-than-expected fourth-quarter results stemmed from an influx of consumers upgrading from midrange smartphones to higher-end devices capable of supporting AI applications. A discernible market bifurcation between low-end and premium devices has emerged.
“There is a noticeable absence of offerings in the middle segment,” he remarked. “This trend is not only prevalent in China but also in India. We continue to witness growth in the premium tier.”
Investors remain keenly aware of the implications stemming from Apple’s shift to in-house modems. Analyst Stacy Rasgon from Bernstein suggested that while Apple is likely using its own chips in its iPhone Air and iPhone 16e models, it continues to utilize Qualcomm chips for the iPhone 17 models, thereby softening the prospective impact on Qualcomm’s operations.
Notably, Qualcomm disclosed that Apple, Samsung, and China’s Xiaomi collectively represent over 10 percent of the company’s revenue, as stated in securities filings on Wednesday.
Last month, Qualcomm unveiled a new suite of AI data center chips, revealing that Humain, an AI enterprise backed by Saudi Arabia’s sovereign wealth fund, will become a client. Amon affirmed in the conference call that Qualcomm is engaged in discussions with another significant customer.
“We are in conversation with a hyperscaler,” Amon remarked, employing a term commonly used in the technology sector to describe large computing firms. “We are quite pleased with the results of that discussion.”
For the fiscal year 2025, Qualcomm reported that non-Apple revenue across all sectors grew by 18 percent. Within its chip division, revenue from handsets experienced a 14 percent upsurge to $6.96 billion, surpassing Visible Alpha’s estimates of $6.64 billion.
“Devices are gradually acquiring advanced capabilities, encouraging consumers to invest in more sophisticated models, similar to the trend observed following the pandemic,” Amon commented to Reuters.
Qualcomm’s Chief Financial Officer Akash Palkhiwala predicted that handset revenue would witness a quarter-over-quarter growth rate in the “low teens,” implying at least $7.7 billion in handset chip sales for the upcoming fiscal first quarter. This forecast is ahead of analysts’ expectations of $7.22 billion, as per Visible Alpha data.
In the fiscal fourth quarter ending September 28, Qualcomm disclosed sales and adjusted profits of $11.27 billion and $3 per share, respectively, outpacing Wall Street’s expectations of $10.79 billion in sales and an adjusted profit of $2.88 per share.
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