Chip Crunch Easing, But ‘We Would Ship More if We Could’: Qualcomm CEO
Qualcomm is standing by its previous forecasts that the industry will ship more than 750 million 5G handsets in 2022, which would be about 40% growth from 2021, said Chief Financial Officer Akash Palkhiwala on an earnings call Wednesday for fiscal Q1 ended Dec. 26. Qualcomm's handset revenue of $6 billion increased 42% year over year due to better than 60% revenue growth from Snapdragon chipsets for Android devices, he said.
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The increase in Android revenue was “driven by the launch of our new Snapdragon premium chipset and additional shipments across high and mid-tiers due to our second sourcing efforts,” said Palkhiwala. “Android is a success story for us,” said CEO Cristiano Amon.
“We're very happy where we are” in the competitive Android space,” said Amon. “When we launched the new Snapdragon 8 series, we had 50 million views of the launch event.” Snapdragon is becoming “the preferred brand for premium-tier Android,” he said. “Not a single one of our customers thinks about flagship without thinking of the Snapdragon 8 series. It's a very strong position to be in.” As more customers move to the premium tier, “we're seeing that turn into gains” of market share for Qualcomm, he said. “That's why Android is the story of our handset business right now.”
Demand is “extremely strong across the board,” said Palkhiwala. “We are continuing to see demand outpacing supply.” Qualcomm put second-sourcing plans in place “very early in the process,” anticipating some of the supply-chain challenges, he said. “We have three second-sourcing parts, especially in the mid-high tiers that are shipping at scale now, and that shows up in our financial performance.”
Qualcomm is also seeing “capacity builds” from some suppliers, said Palkhiwala. “We expect supply to continue to improve gradually through the year, in addition to where we are at now.” In “simple terms,” Qualcomm is experiencing “supply improvements,” said Amon. Its “forward guide” of 32% revenue growth in fiscal Q2 ending March at the high end of the forecast range “contemplates the visibility we have in supply,” he said. “But we still have more demand than supply. We would ship more if we could.”
Qualcomm’s “scale” has been “very helpful” to the company during the chip crunch, said Amon. One advantage “is the high predictability we have on our demand,” he said. “We can bet on ourselves, and therefore, we have the ability to make long-term capacity planning and get long-term capacity commitments from our vendors.” There’s also “the scale that we have to be able to utilize multisourcing,” and that has “put us in a good position to navigate through this,” he said.