Qualcomm delivers mixed guidance as seeks to mitigate higher costs

(AWP Alliance News) - Qualcomm Inc on Wednesday said it will increase prices to reflect increased costs although the benefits are unlikely to be felt until the second half of financial 2027.

The San Diego, California-based semiconductor chip manufacturer reported net income of USD1.25 billion in the three months ended September 27, the financial fourth quarter, swung from a net loss of USD3.12 billion the year prior.

Revenue declined 8.4% to USD10.32 billion from USD11.27 billion, ahead of USD10.12 billion Wall Street consensus.

GAAP diluted earnings per share amounted to USD1.17 compared to losses per share of USD2.89 a year ago, below consensus of USD1.37. Non-GAAP EPS declined to USD2.17 from USD3.00.

"We are pleased to deliver fourth quarter non-GAAP revenues at the high end of our guidance, along with 36% year-over-year growth in combined QCT Automotive and IoT revenues," said Chief Executive Cristiano Amon. "Fiscal 2027 marks the start of our non-handset revenue inflection, including the ramp of our Data Center business. Non-handset revenues are projected to grow by more than 60% year-over-year, and we are reiterating our fiscal 2027 Data Center revenue target of USD5 billion."

For the financial year as a whole Qualcomm reported revenue of USD43.12 billion, down 2.6% from USD44.28 billion and net income of USD13.63 billion, ballooned from USD5.54 billion.

GAAP diluted EPS improved to USD12.70 from USD5.01. Non-GAAP EPS fell 12% to USD10.54 from USD12.03.

For the first quarter of financial 2027, Qualcomm forecast revenue of USD10.4 billion to USD11.2 billion, which at the mid-point is above USD10.55 billion consensus.

GAAP EPS is forecast of USD1.03 to USD1.23. Non-GAAP diluted EPS is projected of USD2.15 to USD2.35 which at the mid-point is below Bloomberg-cited consensus of USD2.32.

Qualcomm said the semiconductor industry is experiencing a broad-based increase in input costs across wafer fabrication, assembly, test, advanced packaging, memory and other materials. It said it is taking actions to reflect the higher input costs in product pricing and anticipates the full benefit of these actions to be reflected in QCT gross margins in the second half of fiscal 2027.

Earlier on Wednesday, Qualcomm announced an agreement with Elon Musk's Space Exploration Technologies Corp to supply radio equipment, baseband units and software for Starlink Mobile's planned nationwide terrestrial 5G network.

Last month, Bloomberg reported that the firm was eyeing the acquisition of at least 80,000 cellular infrastructure sites across the US from infrastructure provider Crown Castle.

The companies did not disclose the financial terms of the agreement, but Qualcomm called it "our biggest 5G deal yet."

"Building a nationwide network demands high performance and power efficiency at every site. Dragonwing Cellular Infrastructure platforms bring together advanced massive multiple-input multiple-output, purpose-built processing and commercial-grade layer 1 software to help Starlink deliver an exceptional nationwide network," said Qualcomm executive vice president Durga Malladi.

"Together with SpaceX, we are building world-leading cellular infrastructure in the United States, advancing 5G today, with an opportunity to lay the foundation for AI-native 6G in the years ahead," Malladi added.

Shares in Qualcomm were down 6.9% at USD161.25 in New York after hours on Wednesday. They had earlier closed up 5.3%. SpaceX ended 3.8% lower at USD135.92. It fell 0.3% after hours.

By Jeremy Cutler, Alliance News reporter

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