On Wednesday local time in the United States, chip giant Qualcomm released its fourth quarter and annual results for the fiscal year ended September 24, 2023. In the fourth fiscal quarter, the company achieved a revenue of 8.67 billion US dollars, a decrease of 24% from 11.39 billion US dollars in the same period last year; The net profit was $1.489 billion, a year-on-year decrease of 48%. The revenue for the fiscal year 2023 was $35.82 billion, a decrease of 19% compared to the same period last year, and the net profit was $7.232 billion, a decrease of 44% compared to the same period last year.
Despite a significant decline in Qualcomm's performance compared to the same period last year, the company has given a strong forecast for the first quarter of the 2024 fiscal year - revenue of $9.1 billion to $9.9 billion, higher than expected. Qualcomm's stock price rose by over 3% in post market trading.
Qualcomm's performance is closely related to the smartphone industry, but the smartphone market has been in a sluggish state for over two years.
Moreover, with the return of Huawei's "5G speed", it is believed that Qualcomm will lose Huawei's orders. Thanks to the newly launched Mate 60 series, Huawei has become the largest variable in the current mobile phone market. According to a sales report released by Counterpoint, Huawei's sales in the third quarter increased by 37% year-on-year and ranked sixth with a market share of 12.9%.
In response, Qualcomm CEO Amon stated at the financial report meeting, "We have no further plans to sell our 4G SoC (system level chip) to Huawei. Looking ahead, Huawei's contribution to Qualcomm will be very small. Our Android customers are continuing to grow, which will not change the development trajectory of our Android customers in China
Sales of mobile phone chips decreased by 27% year-on-year
From the perspective of business structure, Qualcomm's main business can be divided into two major segments: semiconductor business (QCT), which focuses on chip products, and technology licensing business (QTL), which is responsible for intellectual property authorization.
In the fourth quarter of the 2023 fiscal year, Qualcomm's QCT business revenue was $7.37 billion, a year-on-year decrease of 26%. Among them, Qualcomm's sales of mobile phone chips decreased by 27% year-on-year, reaching $5.46 billion; The automotive business has become a highlight of the QCT department, with sales reaching 535 million US dollars, a year-on-year increase of 15%; The IoT business decreased by 31% year-on-year to $1.38 billion. In terms of licensing business QTL, Qualcomm achieved sales of $1.26 billion in the fourth quarter, a year-on-year decrease of 12%.
On the customer side, earlier this year, Qualcomm stated that it would continue to provide Apple with 5G modems for mobile phones until 2026. Previously, analysts had expected Apple to use different modems this year, but the renewal of Apple's contract with Qualcomm demonstrates Qualcomm's advantages and cooperation value in 5G technology.
In terms of the industry, many institutions have predicted in reports recently that the recovery signal of the smartphone market is approaching.
Counterpoint's monthly report on smartphone sales shows that in the third quarter of 2023, smartphone sales in China decreased by 3% year-on-year, with a narrowing year-on-year decline, indicating that the market may have bottomed out; IDC stated that although the overall shipment volume in the third quarter showed a downward trend, with the launch of multiple popular new products since August, the popularity of the Chinese smartphone market has rebounded, and the attention of various sectors of society to smartphones is significantly higher than in the first half of the year, indicating an improvement in consumer demand.
According to IDC's monthly sales out retail data for mobile phones in China, the actual retail volume of smartphones in China has increased by 0.4% year-on-year in the third quarter of this year, and the year-on-year growth trend continued in the first half of October. The institution predicts that the shipment volume of China's smartphone market is expected to reach a turning point in the fourth quarter of 2023, achieving its first rebound in nearly 10 quarters.
Strengthen end-to-end AI capabilities
In addition to traditional business, in recent years, Qualcomm has frequently made efforts in AI.
In May of this year, Microsoft announced plans to run offline AI models on Qualcomm Snapdragon processors. In July, Meta announced that its large language model Llama2 would run on Qualcomm chip-based smartphones and PCs in 2024.
At the recently held 2023 Snapdragon Summit, Qualcomm released the Snapdragon X Elite and the third-generation Snapdragon 8, the former for Windows 11 PCs and the latter for smartphones. In the design of two new chips, Qualcomm has taken into account the demand for generative AI experience on the terminal side. Among them, the third-generation Snapdragon 8 is Qualcomm's first mobile platform specifically designed for generative AI, supporting a multi billion parameter model on the terminal side; The Snapdragon X Elite supports running generative AI models with over 13 billion parameters on the terminal side.
An Meng stated: As we enter the era of generative artificial intelligence, we see an unprecedented pace of innovation. Gen AI on devices is developing in parallel with Gen AI in the cloud, achieving new uses. It has the potential to change the way we interact with devices, making the user experience more intuitive, personalized, and increasing privacy and security. We have established Qualcomm as a smartphone, next-generation laptop, XR, and automotive device end As the leader of Gen AI, we are fully prepared and will benefit from this opportunity