Chip manufacturer Qualcomm stated Wednesday that the coronavirus epidemic in China poses a potential menace to the smartphone industry, with possible damage to manufacturing and sales.
The comments by Qualcomm, the world’s greatest supplier of modem chips that connect smartphones and other units to wireless data networks, dragged down chip stock shares regardless of signs that a trade slowdown was coming to an end.
Qualcomm’s CFO, Akash Palkhiwala, on a conference call with investors following the release of quarterly income, stated the company expects “significant uncertainty around the impact from the coronavirus on handset demand and supply chain.”
The San Diego stationed chip manufacturer forecast income for its fiscal second-quarter largely above Wall Street estimations, in the newest sign that the extended downturn in the world chip industry is easing.
The estimate was wider than usual due to the epidemic in China, which has killed hundreds and triggered fears around the world. The firm lowered the bottom end of its earnings-per-share steerage by 5 cents to account for possible disruptions, Palkhiwala stated.
On the conference call, Qualcomm executives tried to calm analyst concerns over the novel coronavirus, saying that the biggest 5G markets this year are anticipated to be in the U.S., Korea and Japan, and that the company may weather disturbances.
However, investors’ virus worries clouded results that otherwise beat expectations.
While it’s dominant in mobile modems and processors, Qualcomm has been driving to win over customers with the kind of chip called a radio-frequency front end that’s more advanced in phones that use 5G.
Even though it estimates fewer modem sales than Wall Street anticipated, it generated more income per modem shipped than previously.
In an interview, Mollenkopf stated the corporate’s forecast reflected robust demand for radio-frequency chips from smartphone makers, particularly in China, where manufacturers are putting 5G capabilities into cheaper gadgets that will sell in higher quantities prior to Qualcomm had initially expected.