Qualcomm tumbles after releasing gloomy Q2 guidance thanks to memory chip supply crunch
Q1 results beat expectations, but the memory chip crunch looks to be weighing on the forward outlook.
Qualcomm is tumbling in after-hours trading after releasing an underwhelming Q3 sales outlook.
Shares were recently down 6%.
For its fiscal Q1, the seller of smartphone and other chips reported:
Sales of $12.25 billion (estimate: $12.2 billion, guidance for $11.8 billion to $12.6 billion).
Adjusted earnings per share of $3.50 (estimate: $3.41, guidance for $3.30 to $3.50).
For Q2, however, management said sales would range from $10.2 billion to $11 billion. Even the top end of that range is lower than the $11.2 billion consensus estimate. Its bottom-line outlook also disappointed, with earnings per share projected to range from $2.45 to $2.65, while the consensus estimate was at $2.89.
Coming into this report, there were concerns about whether smartphone supply and demand would hold up amid rising memory chip prices, with sellers incentivized to meet demand from AI customers first. Those fears look to be warranted.
“While our near-term handsets outlook is impacted by industry-wide memory supply constraints, we are encouraged by end-consumer demand for premium and high-tier smartphones, and remain on track to achieve our fiscal 2029 revenue goals,” President and CEO Cristiano Amon said.
The earnings presentation accompanying these results indicated that several original equipment manufacturers, especially in China, have taken steps “to reduce their handset build plans and channel inventory” in light of the “industry-wide memory shortage and price increases,” which “are likely to define the overall scale of the handset industry through the fiscal year.”
During the quarter, Qualcomm laid out plans to capitalize on the AI boom by announcing new chips for data centers, with Saudi Arabia’s HUMAIN lined up as the first major customer.
