Qualcomm rides 5G tax and higher smartphone prices to massive Q4 earnings


Qualcomm stock rallied more that 13% in after-hours trading following the release of a better-than-expected earnings report. The San Diego-based chip giant posted fiscal Q4 earnings on Wednesday that beat Wall Street’s expectations.

The company reported earnings of $1.45 per share on revenues of $6.5 billion. This was above the expected $1.17 per share and $5.96 billion in revenues that analysts predicted. Qualcomm’s chip segment, which represents the company’s largest in sales and includes revenues from headset, IoT, automotive, and radio, raked in $4.87 billion in sales, an increase of 38% in sales when compared to the same quarter last year. Despite a seemingly volatile year for smartphone sales, Qualcomm, whose SoCs power many of the best Android phones, managed to ship 162 million chips during its fiscal fourth quarter, which was also above analyst expectations.

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Qualcomm’s other division, QTL, collects licensing feed from tech companies that use its technologies. This division saw an increase in revenues of 30% over last year to $1.51 billion. This doesn’t include Qualcomm’s pending licensing deal with Huawei to resume shipping chips to the Chinese smartphone manufacturer, which the US has not yet responded to. Even so, Qualcomm is expecting revenues from the current fiscal first-quarter to lie somewhere between $7.8 billion and $8.6 billion, which is above the analyst-estimated $7.15 billion. This is based on the 500 million 5G smartphones that are projected to be shipped in 2021.

Qualcomm’s impressive Q4 earnings come during a volatile year for smartphone sales, as the global economic crisis forces consumers to be more cautious about spending. This was evident with slowing sales from giants like Samsung, which saw a dip in its sales during the second quarter of the year when the pandemic began to take its toll on the job market. The Snapdragon 865 5G chip contributed to rising prices of flagship smartphones, partly due to Qualcomm requiring companies to buy the chip and modem separately. Fortunately, companies were able to lean on chips like the Snapdragon 765G and 750G which included near-flagship performance and integrated 5G modem at a cheaper cost.

Qualcomm is expected to announce its next flagship SoC next month, with the successor to the Snapdragon 765G likely to be announced early next year.

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