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Qualcomm Gives Upbeat Forecast, Lifted by 5G Smartphone Demand

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(Bloomberg) -- Qualcomm Inc., the world’s largest smartphone chipmaker, delivered a bullish quarterly forecast, helped by the growth of 5G networks and consumer demand for new devices.

Earnings will be $2.15 to $2.35 a share in the period ending in September, the company said Wednesday, well ahead of the average projection of $2.07. Revenue will be $8.4 billion to $9.2 billion, compared with an estimate of $8.5 billion.

Countries around the world are upgrading their mobile networks to the new 5G standard, and consumers -- increasingly free from the constraints of pandemic lockdowns -- are upgrading their phones. Qualcomm’s new chief executive officer, Cristiano Amon, also is trying to expand the company’s reach beyond the phone chip market to win orders in computers, networking gear and home electronics.

Qualcomm is on pace to deliver $10 billion in annual revenue from outside its core market, Amon said in an interview.

“The diversification is real,” he said. “We are becoming a company that’s critical to a lot of other industries.”

Qualcomm shares rose 2.5% in extended trading on the news. They had been down 6.5% this year through Wednesday’s close.

Management has said that Qualcomm’s performance would have even been better if it were able to get more chips from its contract manufacturers. Like much of the industry, the San Diego-based company outsources production -- and it’s been working to get more supply.

Earlier this week, Intel Corp. announced plans to produce components for Qualcomm, a rival in some markets. That adds the world’s largest chipmaker to Qualcomm’s list of suppliers, which also includes Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co.The company is unique in the industry because a large chunk of its profit comes from technology licensing. Makers of phones pay to use Qualcomm’s technology regardless of whether they buy its chips, because it owns patents that cover some of the fundamentals of mobile communications.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 Inc. and Samsung, the company’s projections are a closely watched indicator of the health of the mobile-phone market.Excluding certain items, profit was $1.92 a share in the fiscal third quarter, compared with Wall Street’s average estimate of $1.69.

The chipmaker has more demand for products in every category than supply constraints will allow it to fill, Amon said. But the situation is changing and Qualcomm expects “material improvement in supply by the end of the year,” he said.

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