China boost sees Qualcomm’s Q3 results buck the trend

21 Jul 20161 Share

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Samsung Galaxy S7 Edge helped drive Qualcomm sales up. Photo via Luke Maxwell

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Qualcomm’s third-quarter results came in above analysts’ predictions, with growth in Chinese licensees helping drive its high-end chip sales over the 200m mark.

With sales of $6bn, a rise of 3.6pc on last year, Qualcomm’s financial results for Q3 2016 posted an impressive number of high-end chips sold around the world, which probably comes as no surprise.

Qualcomm

Although analysts predicted something closer to 195m chips sold in the quarter, Samsung’s results from earlier this month showed a spike in Galaxy S7 and S7 Edge sales, which hinted at how Qualcomm’s chips are making their way to market.

Samsung walked away from Qualcomm Snapdragon 820 in the past but a return seems to have worked out for both companies.

However, beyond the high-end, highly profitable area of smartphone production, the massive China market was a key aide to Qualcomm’s Q3 figures – net income was $1.44bn, up 22pc on last year’s $1.18bn.

Despite the global slowdown in smartphone growth – IDC predicts 3.1pc growth in 2016, following 10.5pc in 2015 and 28pc in 2014 – Qualcomm seems to be negotiating its way through the market better than most.

“Our chipset business is benefitting from a strong new product ramp across tiers, particularly with fast growing OEMs in China,” said Steve Mollenkopf, CEO of the company.

China-based OEMs like Huawei, Xiaomi and ZTE helped Qualcomm sell $62,6bn worth of devices through licensees.

Back in January, the outlook was grim for Qualcomm, with Q1 figures down almost 20pc on the previous year. Smartphone shipments worldwide flattened out in the first quarter of 2016, with just 0.2pc growth year-on-year, the smallest growth on record. Even the two market leaders were feeling the pinch, as Apple and Samsung saw the biggest decline.

IDC attributed the tiny 0.2pc growth rate to smartphone saturation in developed markets. This makes China a more important market than ever.

Gordon Hunt is a journalist at Siliconrepublic.com

editorial@siliconrepublic.com