Qualcomm Exclusive: CFO On How Samsung License Extension Offers New Revenue Opportunities, Cloud Growth And iPhone 2023 Rumors

Qualcomm Exclusive: CFO On How Samsung License Extension Offers New Revenue Opportunities, Cloud Growth And iPhone 2023 Rumors

Semiconductor company Qualcomm Inc QCOM reported third-quarter results after the market close Wednesday. Here are the key highlights and exclusive comments from Chief Financial Officer Akash Palkhiwala.

What Happened: Qualcomm reported third-quarter revenue of $10.9 billion, up 37% year-over-year. Revenue came in at the midrange of the company’s forecast of $10.5 billion to $11.3 billion.

The company reported non-GAAP earnings per share of $2.96, beating a Street estimate of $2.87, according to data from Benzinga Pro. Earnings per share came in ahead of the company’s previous guidance of a range of $2.75 to $2.95.

“We are pleased to report strong quarterly results, with record QCT Automotive and IoT revenues in a challenging macroeconomic environment,” Qualcomm CEO Cristiano Amon said in the press release.

Samsung Extension: Qualcomm reported an extension of an agreement with Samsung for patent licensing.

Palkhiwala said the Samsung agreement is factored into future guidance.

“We actually had a license with Samsung that was expiring, we extended it all the way to 2030,” Palkhiwala said.

The patent license includes Samsung using Qualcomm in its flagship Galaxy phones and expands the product reach going forward.

“[It] ncludes all technology including 6G, so [it's a] very, very strong agreement with Samsung [and an] established opportunity for us to grow our revenue.”

Palkhiwala said the agreement expands Qualcomm to other Samsung devices including PC tablets and extended reality devices, including those used for the metaverse.

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Qualcomm's Growth Opportunities: Commenting on the CHIPS Act, Qualcomm President of Technology Licensing & Global Affairs Alex Rogers said the company supports the legislation.

“The CHIPS Act is something we definitely support,” Rogers said. “It will give Qualcomm more options.”

Rogers said the CHIPS Act could help provide “more security in terms of supply chain” for Qualcomm moving forward.

Palkhiwala points to continued opportunities for Qualcomm in the cloud sector.

“Everything wants to connect to the cloud and clearly Microsoft and Google are going to be on the cloud side,” Palkhiwala said, referencing earnings reports from Microsoft Corporation MSFT and Alphabet Inc GOOG GOOGL earlier this week.

“Everything that connects to the cloud needs chips from Qualcomm and that’s the opportunity for us to be the yin to Microsoft’s yang.”

Qualcomm has been rumored to be included in the 2023 iPhone from Apple Inc AAPL after it was previously announced that Apple would work on using its own 5G modem chip. 

When asked about any comment on Apple including Qualcomm in the 2023 iPhone, Palkhiwala offered up the following:

“We do have the best modem, so Apple knows where to call.”

What’s Next: Qualcomm is forecasting fourth-quarter revenue to come in a range of $11 billion to $11.8 billion. The company sees fourth-quarter earnings per share coming in a range of $3 to $3.30.

Palkhiwala said supply chain constraints are factored into the guidance.

“Our general view is that the second half of this year we’ll see demand and supply aligning a lot better,” Palkhiwala said.

QCOM Price Action: Qualcomm shares are down 2.8% to $149.12 in after-hours trading Wednesday.

Photo via Shutterstock.

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