Qualcomm missing 5G chip sell revenue from Huawei amid low business forecast for the next quarter

During the fourth quarter forecast, Qualcomm talked about 5G chip supply restrictions on Huawei and it indicates that the chip seller is missing business opportunities amid chip business decline.

Qualcomm said that it doesn’t see any further sales to Huawei because it lacks permission from US Commerce to sell 5G chips to Huawei.

On a conference call with investors, Chief Financial Officer Akash Palkhiwala said Qualcomm’s forecast for the rest of the year assumes no “material revenue” from Huawei.

“As you are aware we have a 4G license for shipping into Huawei. We do not have a 5G license, and we are not assuming any material revenue going forward,” Palkhiwala said.

Kinngai Chan, the analyst at Summit Insights Group, said Huawei is not a large Qualcomm customer, and the U.S. company’s stock declined because its outlook is “much weaker than expectations” amid flat Android handset sales.

Since 2021, Qualcomm is selling 4G chipsets to Huawei because Huawei cannot print its own Kirin chipset due to the US ban. In the second half of this year, Huawei became the biggest progress maker in China, and its share of smartphone sales returned among the top 5.

In the wake of its return, Qualcomm is now missing the growth opportunity after getting restricted by the US to sell 5G chips to Huawei. The tech company could have helped Qualcomm to maintain revenue if the business remain as usual.

Forecast:

Qualcomm estimated fourth-quarter revenue of $8.1 billion to $8.9 billion. Meanwhile, analysts polled by Refinitiv expected $8.70 billion. The company forecast a fourth-quarter adjusted earnings range with a midpoint of $1.90, in line with analysts’ consensus estimate of $1.91 per share according to Refinitiv data. Following this forecast, Qualcomm shares fell by 7%.

Qualcomm CEO Cristiano Amon previously predicted that the Chinese customers of the company could miss the healthy chip business. While chip supplies may take some quarters to return to full boom.

Aside from Huawei, slowed sales among Android smartphone makers are also affecting Qualcomm’s revenue graph. Revenue at Qualcomm’s handset chip business fell 25% to $5.26 billion in the third quarter. Adjusted overall revenue of $8.44 billion missed estimates of $8.50 billion.

(source – Reuters)