“The shortage in the semiconductor industry is across the
board,” said incoming Chief Executive Officer Cristiano Amon.
Like most chipmakers, Qualcomm outsources production to
companies such as Taiwan Semiconductor Manufacturing Co. and Samsung
Electronics Co. These suppliers are trying and so far failing to adjust to a
vigorous rebound in demand. The auto sector has complained about this recently,
but Qualcomm’s comments show the problems are broader.
When the Covid-19 pandemic first struck in early 2020, chip
orders initially collapsed. But remote work and studying has spurred demand for
computers, while car buying has surged as people avoid public transport. That,
in turn, has caused auto and electronics makers to re-up their chip purchases.
Amon said orders for chips that run computers, cars and many
other internet-connected devices are swamping the industry, which mostly relies
on just a handful of factories in Asia. Supply should improve in the second
half of 2021, he added.
Qualcomm shares fell about 6% in extended trading. The stock
closed at $162.30 on Wednesday in New York, leaving it up 6.5% in 2021.
The company also reported quarterly results on Wednesday and
gave an upbeat forecast. However, that didn’t satisfy some analysts and
investors who have become more bullish on Qualcomm recently.
Outgoing CEO Steve Mollenkopf said Qualcomm’s performance
was curbed by supply constraints.
Apple Inc., a major Qualcomm customer, said last week that
sales of high-end iPhone 12 models were limited by the availability of some
components. Earlier on Wednesday, General Motors Co. warned that a global
semiconductor shortage will reduce production this year as the carmaker plans
downtime at three plants.
Qualcomm is the biggest maker of chips that connect
smartphones to wireless networks and also supplies processors that give the
devices their computer-like capabilities. With customers including Apple and
Samsung, the company’s projections are a closely watched indicator of the
health of the mobile phone market.In its fiscal first quarter, Qualcomm said
revenue was $8.24 billion, a gain of 62% from a year earlier.
Analysts, on average, projected $8.25 billion. Net income
was $2.12 a share. Excluding certain items, profit was $2.17 a share, compared
with Wall Street’s average estimate of $2.09.Last month, Qualcomm said Amon
will succeed Mollenkopf, who will retire in June. - Bloomberg