Qualcomm forecasts sales above estimates, settles dispute with Huawei

An attendee walks past an advertisement for Qualcomm at the MWC Shanghai exhibition

Shares jumped to a high of $106.50 in extended trading after closing at $93.03 in NY.

"In China, just midway through the calendar year and despite the impact of COVID-19, 5G now represents the majority of domestic mobile phone shipments", he said.

Qualcomm on Wednesday reported fiscal third quarter earnings and announced that it had reached a settlement with Huawei that boosted its fourth-quarter outlook. Market watchers pegged the brand's FQ4 revenue at $5.77 billion. That's likely a reference to Apple's widely expected 5G-capable iPhone; Qualcomm previous year replaced Intel as the 5G silicon vendor for the iPhone maker.

In its fourth fiscal quarter, that agreement will pay Qualcomm $1.8 billion plus whatever royalties come from the settlement, Qualcomm said.

Huawei, which is still subject to United States government restrictions, trumped Samsung for the first time in the worldwide smartphone market in the second quarter, research Canalys said on Thursday. Bloomberg reports market analysts predicted the firm would report sales of $4.8 billion with profits of $0.70 per share.

Qualcomm expects that in its fiscal fourth quarter, its revenue will be between $5.5 billion and $6.3 billion, excluding other items.

On a per-share basis, the San Diego-based company said it had profit of 74 cents. Apple makes its own core processor but uses Qualcomm's modem chip.

Moorhead noted that the company signed 15 new 5G licenses for a total of 100, and added more than 285 Snapdragon 5G design wins for a total of 660.

The chipmaker has repaired a once-broken relationship with Apple Inc. and will be returning to a role in the iPhone models debuting later this year.

The big picture: The company posted earnings for the three months ending June 30 that were above expectations and said it expects that phone sales this quarter could be down 15% year over year, "including a partial impact from the delay of a global 5G flagship phone launch".

On Huawei, Qualcomm said it reached a settlement agreement and a new "long-term, global patent license agreement" with the Chinese vendor, which Qualcomm said includes a cross-license granting back rights to "certain of Huawei's patents, covering sales beginning January 1, 2020".

Qualcomm is unique in the chip industry because it gets the bulk of its profit from licensing patents that cover the fundamentals of modern phone systems.

It is still seeking to overturn a sweeping US antitrust decision against the company.



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