The world’s largest smartphone processor manufacturer is benefiting from a rebound in the smartphone market. Consumers are upgrading their devices to access advanced artificial intelligence features like chatbots and image generators, driving demand for Qualcomm’s chips that support these applications. The chipmaker’s earnings forecast for the first quarter exceeded Wall Street’s expectations, pushing Qualcomm’s shares up over 8% on Thursday.
The San Diego-based company, the top supplier of processors for mobile devices, expects sales and adjusted profits for the December-ending quarter to be around $10.5 billion and $3.05 per share, respectively. This aligns closely with analysts’ projections, which estimated approximately $10.80 billion in revenue and $3.07 per share in earnings.
Qualcomm’s results also highlighted the growing role of semiconductors in automobiles. The company expects revenue in its automotive business to rise 87% from a year earlier to almost $4 billion as carmakers increase the amount of electronics in their vehicles.
As the automotive sector continues to grow, so does Qualcomm’s interest in capturing more of that growth by expanding its offerings to include AI computing and 5G connectivity. Its latest Snapdragon processors have been optimized for machine learning, allowing them to quickly process large amounts of data. The technology could make cars more intelligent, helping them improve safety by detecting obstructions and keeping drivers on track during lane changes, for example.
On the mobile phone side, Qualcomm’s surge in Chinese sales reflects a revival in handset markets following a two-year slump as consumers upgrade their devices for AI functions. The company derived 46% of its total sales last year from customers based in China. Qualcomm executives brushed off questions about the possibility of tariffs on Chinese goods, saying that such concerns were not driving the surge in sales.
In a separate development, Qualcomm announced plans to raise $7.1 billion by selling stock and debt to fund an expansion of its chip business into laptops and artificial intelligence in data centers. The chipmaker plans to list the stock in Hong Kong’s leading exchange in 2022.
