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Qualcomm Forecasts Strong Q2, Shares Drop After Licensing Outlook

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Qualcomm exceeded analysts’ expectations for Q1 sales and adjusted profits but forecast a more tempered outlook for its patent licensing business, sending its stock price down 4.8% in after-hours trading. The company reported Q1 sales of $11.67 billion and adjusted earnings of $3.41 per share, significantly outperforming the expected $10.93 billion and $2.96 per share. For the upcoming fiscal second quarter, Qualcomm projected sales of $10.75 billion and adjusted profits of $2.80 per share, both surpassing analysts’ expectations.

However, the company warned that its patent licensing business, which generates revenue from companies paying royalties for 5G technology, would not see growth this year after a deal with Huawei expired. This news caused some investor concern, despite positive projections in Qualcomm’s chip business. Licensing revenue for Q2 is forecasted at $1.35 billion, below the $1.43 billion analysts anticipated.

The market’s response was mixed, with Qualcomm’s shares dropping by 4.8% after the announcement. Investors have been closely monitoring Qualcomm’s involvement in the AI and smartphone markets, and while the company continues to secure major deals, such as with Samsung and Microsoft, the uncertain future of its Huawei agreement looms large.

Despite the dip in licensing revenue expectations, Qualcomm’s position in the smartphone, automotive, and IoT markets continues to strengthen. The company reported strong handset revenue of $7.57 billion, up 13% from the previous year, and its automotive chip sales saw significant growth, reaching $961 million.

 

Qualcomm Announces Arm Has Withdrawn License Breach Notice

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Qualcomm CEO Cristiano Amon announced on Wednesday that Arm Holdings has withdrawn its notice of a breach regarding Qualcomm’s license agreement. This followed a dispute over the technology used in Qualcomm’s personal computer chips. Arm had initially threatened to terminate the agreement in October due to concerns about Qualcomm’s chip technology.

Amon confirmed that Arm notified Qualcomm that it had withdrawn its breach notice and has no immediate plans to terminate the architecture license agreement. This announcement came during a conference call discussing Qualcomm’s first-quarter results.

In December, Qualcomm secured a favorable ruling in the ongoing dispute when a jury determined that Qualcomm’s personal computer chips were properly licensed under the existing agreement with Arm. However, the jury could not reach a unanimous decision on other aspects of the case, leading Arm to file for a new trial.

 

Nvidia CEO Teases Future Plans for Desktop Chip Developed with MediaTek

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At CES 2025, Nvidia CEO Jensen Huang revealed that the company has plans for a new desktop central processor (CPU) co-designed with MediaTek. The CPU was unveiled as part of Nvidia’s “Project DIGITS” desktop, which features Nvidia’s latest “Blackwell” AI chip and is priced at $3,000. While the desktop is currently targeting AI developers and is not yet a mass-market product, the collaboration with MediaTek aims to bring an energy-efficient CPU to a broader market.

Huang emphasized that MediaTek would be able to sell the CPU to other markets, and Nvidia’s collaboration is mutually beneficial. “They could provide that to us, and they could keep that for themselves and serve the market. It was a great win-win,” Huang explained. The CPU is designed to challenge the dominance of Intel, Advanced Micro Devices (AMD), and Qualcomm in the consumer and business computer markets.

Nvidia is currently targeting AI developers with Project DIGITS, which runs a Linux-based operating system designed for AI workloads. Huang also hinted at future plans for the desktop CPU but did not disclose specifics. However, he mentioned Nvidia’s strategy to bridge the gap between the Linux OS commonly used by AI developers and Windows, the widely used consumer OS, through the Windows Subsystem for Linux.

“We’re going to make that a mainstream product,” Huang said, noting that Nvidia would support it with professional-grade software, and PC manufacturers would bring the product to end users.