On February 1st, chip giant Qualcomm released its first quarter financial report for the 2024 fiscal year. Data shows that Qualcomm's first quarter revenue was $9.935 billion, a 5% increase from $9.463 billion in the same period last year; The net profit was 2.767 billion US dollars, an increase of 24% compared to the same period last year's 2.235 billion US dollars; Not in accordance with Non GAAP, Qualcomm's adjusted net profit for the first quarter was $3.101 billion, a 16% increase from $2.684 billion in the same period last year.
Turning losses into profits in the mobile phone business
After experiencing four consecutive quarters of decline, Qualcomm's mobile phone business finally saw a year-on-year positive growth in the first quarter of 2024. According to the financial report, Qualcomm's mobile phone business revenue increased by 16% in the first quarter to $6.687 billion, which exceeded the expectations of some analysts.
Analysis firm Counterpoint pointed out that Qualcomm's shipment volume increased in the third quarter of 2023, and inventory gradually returned to normal levels. Meanwhile, the Snapdragon 8 Gen 2 platform has successfully entered the Samsung Galaxy Fold/Flip series, further boosting the shipment volume of Qualcomm chips.
In addition, at the beginning of this year, Google and Samsung jointly released Samsung's latest flagship smartphone - the Galaxy S24. Qualcomm's latest mobile platform, Snapdragon 8 Gen3, provides computing power support for the AI function of the phone.
Qualcomm senior analyst Parv Sharma stated before the financial report that with the recovery of the mobile phone market, declining inventory levels, and rising demand, the early release of the Snapdragon 8 Gen 3 is expected to drive revenue growth in the fourth quarter of 2023, mainly driven by major Chinese OEMs and new Samsung Galaxy series products. Counterpoint also predicts that Qualcomm will occupy over 80% of the GenAI smartphone market in the next two years, with a focus on growth in the high-end chip market.
Another good news is that the modem chip (baseband chip) patent license agreement between Qualcomm and Apple has been extended. Qualcomm announced during its first earnings conference call for 2024 that Apple has extended the license agreement for its modem chip (baseband chip) with Qualcomm until March 2027. That is to say, in the future, Qualcomm is highly likely to continue providing modem chips for future iPhone products.
In addition, Qualcomm has signed a new agreement with Samsung Electronics, a South Korean technology giant that has agreed to use Qualcomm's chips in future consumer electronics devices.
Mobile phone market tends to stabilize in 2024
However, Qualcomm also issued a warning at the performance briefing, stating that despite the recovery of the mobile phone industry, customer inventory remains high in the short term, and some customers continue to consume their inventory; Overinventory has led to a year of sluggishness in the smartphone chip market, which is Qualcomm's main market.
Cristiano Amon, CEO of Qualcomm, believes that there will be a mild recovery in the market while inventory remains high. Amon stated that Qualcomm's mobile phone division's decline in 2023 is in the middle of the 0% -10% range, and it is expected that the global mobile phone industry will remain stable or slightly increase in 2024 compared to 2023; Quota; We expect the Android phone market to stabilize this year after experiencing fluctuations in 2023& Amp; Quota;
For the second quarter of 2024, Qualcomm expects revenue to reach between $8.9 billion and $9.7 billion, with an average of $9.3 billion that meets analysts' previous expectations. However, despite good performance guidance, due to the uncertain recovery prospects, Qualcomm's stock price rose nearly 3% after trading on the 31st and then fell 2.3%. However, the decline subsequently narrowed to 0.4%.
Currently, Qualcomm is attempting to reduce its high dependence on the smartphone market by entering the electric vehicle and personal computer chip markets. Amon stated at the performance briefing:; Quota; Looking ahead, we will leverage the momentum of Snapdragon platform and connectivity, computing, and device side generative artificial intelligence technology to differentiate technology in fields such as mobile phones, cars, personal computers, augmented reality, and industrial Internet of Things& Amp; Quota;
In the first quarter of 2024, Qualcomm's revenue from its automotive business was $598 million, a 31% increase from $456 million in the same period last year; The revenue from IoT business was 1.138 billion US dollars, a 32% decrease from the same period last year of 1.682 billion US dollars.
In addition, Qualcomm Technologies Licensing Group's first quarter revenue was $1.46 billion, a 4% decrease from $1.524 billion in the same period last year; The pre tax profit was 1.08 billion US dollars, a decrease of 3% compared to the same period last year's 1.117 billion US dollars; The pre tax profit margin was 74%, an increase of 1 percentage point compared to the same period last year's 73%.
At present, the revenue of the automotive business provides significant support for Qualcomm. During CES 2024, Nakul Duggal, Senior Vice President and General Manager of Automotive and Cloud Computing at Qualcomm Technologies, revealed to the media that Xiaomi has always been an important partner of Qualcomm in the Chinese market. Qualcomm's investment and technology roadmap in the automotive industry have been recognized by partners such as Xiaomi. He also mentioned that Xiaomi's recent new car has adopted Qualcomm's products.