The chip company QUALCOMM provides a promising forecast for the current quarter, signaling a positive development in the recently shrinking smartphone market. This gives reason to hope that the industry problem of overflowing inventory could soon be solved. The surprising forecast from the world's largest manufacturer of smartphone chips also pleased the financial market. Investors reacted enthusiastically and stock prices rose.
QUALCOMM, among other things, supplies 5G modems for Apple's iPhone and processors for many smartphones with Google's Android operating system, making the company's business a key indicator of market development. For the current first fiscal quarter, released on Wednesday, QUALCOMM predicted a revenue between $9.1 and $9.9 billion. Analyst expectations were at $9.26 billion. The company's stock rose by nearly six percent in US pre-market trading the following Thursday.
Analyst Timothy Arcuri from the Swiss bank UBS mentioned that the demand for smartphones from China provides semiconductor manufacturers with some cyclical support. Additionally, compared to other companies in the industry, QUALCOMM has so far presented one of the best quarterly reports. The trend of holding onto smartphones for longer than before, particularly in China, led to a decline in demand for new models. However, QUALCOMM has now largely reduced excess inventory and expects a 35 percent increase in revenue from Chinese smartphone manufacturers in the current quarter.
There has been a decline in smartphone sales over the last five quarters in a row. Even in the medium term, the demand for new devices remains rather weak. According to calculations by the analysis firm IDC, sales fell by 9.7 percent in the last quarter. QUALCOMM estimates that device sales will decrease in the mid to high single-digit percentage range compared to 2022 this year. CFO Akash Palkhiwala said in an analyst call on Wednesday that this is already an improvement over previous estimates, but overall, the company sees the market stabilizing.
Customers are again building up their inventory to a normal level. However, in the short term, QUALCOMM's business has continued to suffer. In the fourth fiscal quarter, which ended on September 24, revenue fell by 24 percent to 8.63 billion dollars (8.16 billion euros). The profit amounted to 1.49 billion dollars, which means a decrease of 48 percent compared to the previous year. The company's stock rose in pre-market trading on the NASDAQ on Thursday by temporarily 5.72 percent to 117.23 US dollars.
