Qualcomm predicts growth in sales after Apple; shares are rising

A woman walks past a counter showing mobile phones at the Qualcomm booth during the 2021 China International Fair for Trade in Services (CIFTIS) in Beijing, China on September 4, 2021. REUTERS / Florence Lo

Nov 16 (Reuters) – Qualcomm Inc (QCOM.O) said on Tuesday that it expects chip sales to Apple Inc (AAPL.O) to drop in the coming years, but predicted strong growth in chips for autonomous cars and other connected devices, which sends the shares up 4.5 per cent.

Qualcomm currently supplies all of the modem chips that connect Apple devices to mobile data networks, but Apple is working on its own modem chips.

At an investor conference in New York, Qualcomm executives said they expect to deliver only 20% of Apple’s modem chips at the launch of the iPhone in 2023. Qualcomm Chief Financial Officer Akash Palkhiwala expects Apple to account for a “low single-digit” percentage of the company’s chip sales before the end of the financial year 2024.

But Apple’s losses will be more than offset by gains in other areas, Qualcomm executives said.

Qualcomm expects revenue from the automotive sector, where sales were just under $ 1 billion in fiscal year 2021, to reach $ 3.5 billion in five years and $ 8 billion in 10 years. Earlier Tuesday, Qualcomm landed a deal to sell self-driving car chips to German carmaker BMW (BMWG.DE). Read more

Qualcomm executives said Apple had promoted a market for devices like smartwatches and premium wireless headphones.

While Apple itself supplies chips to these devices, Qualcomm said it aims to supply chips to everyone else. The company said it expects $ 9 billion in revenue from its Internet of Things device that delivers such devices, an 80% increase from the $ 5 billion for the device in fiscal year 2021. Growth in this segment will also come from virtual reality headsets such as Meta Platforms Inc’s (FB.O) Oculus Quest 2, which uses a Qualcomm chip and has now sold 10 million units, executives said, citing third-party estimates.

“We are no longer defined by a single end market and a single customer relationship,” CEO Cristiano Amon said during the event.

Amon also said that Qualcomm sells Apple what are called radio-frequency front-end chips that are paired with modem chips. Amon said Qualcomm will have a future chance to compete to sell these chips to Apple, no matter where Apple comes from their modem chips.

Qualcomm executives said these potential gains are not included in Qualcomm’s forecasts and that they expect revenue from phone chips to grow in line with global markets thanks to strong demand from Android device manufacturers.

Reporting by Stephen Nellis in San Francisco and Chavi Mehta in Bengaluru; Edited by Jonathan Oatis and Matthew Lewis

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