Qualcomm Declines on Concerns About Slowing Smartphone Growth

(Bloomberg) — Qualcomm Inc., the world’s biggest seller of smartphone processors, fell in late trading on investor fears that demand for new handsets will stall in the coming year.

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Revenue in the period ending in March will be $10.3 billion to $11.2 billion, the company said Wednesday in a statement. Of that, the company’s licensing business will generate $1.25 billion to $1.45 billion. That compares with an average analyst projection of $1.4 billion.

The outlook for the technology license business, which is based on a projection of the number of phones sold, caused some analysts to question Qualcomm’s view of the industry’s prospects.

Chief Financial Officer Akash Palkhiwala said the company expects the overall market to be either flat in 2025 or increase in low single digits. That projection doesn’t include any revenue from China-based Huawei Technologies Co., which is renegotiating its license with Qualcomm, executives said.

Qualcomm’s outlook for the business is in line with analyst firm IDC, which projected that worldwide smartphone shipments would be in the “low single digits” in 2025 and for a few years beyond.

The shares declined about 4% in extended trading after closing at $175.86 in New York. The stock has increased 14% this year.

Other smartphone stalwarts Arm Holdings Plc and Skyworks Solutions Inc. also fell in late trading after they gave forecasts that fell short of some analysts’ projections. The results from the companies added to the investor concern about the industry’s overall growth.

The San Diego-based chipmaker collects fees calculated as a percentage of the cost of a handset regardless of whether the phone maker uses its chips. Qualcomm won those rights in intellectual property lawsuits around the world, establishing that it can charge royalties on its patents that cover the basic way that phones connect with networks.

While the overall market for smartphones is no longer expanding as rapidly as in the past, Qualcomm’s strength as the provider of semiconductors for expensive devices such as Samsung Electronics Co.’s Galaxy range helps boost its growth. The company’s efforts to expand outside of its central market into automotive and personal computers is also helping spur revenue.

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