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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.

 

GlobalFoundries Appoints Tim Breen as New CEO

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GlobalFoundries, the world’s third-largest contract chipmaker, announced on Wednesday that Tim Breen will be its new CEO. Breen, who joined the company in 2018 and has served as its Chief Operating Officer since 2023, succeeds Thomas Caulfield, who will transition to the role of executive chairman.

Shares of GlobalFoundries remained mostly unchanged following the announcement. Before his tenure at GlobalFoundries, Breen held a senior executive position at Mubadala Investment Company, Abu Dhabi’s sovereign wealth fund and GlobalFoundries’ largest stakeholder.

In addition to Breen’s appointment, GlobalFoundries also announced that Niels Anderskouv, a former executive at Texas Instruments, will be the company’s new president. Anderskouv will replace Breen as Chief Operating Officer and will oversee manufacturing and product strategy.

Caulfield, who led the company through its 2021 IPO and had been CEO since 2018, praised Breen and Anderskouv for their leadership and vision, stating that together they are well-positioned to drive GlobalFoundries forward.

The company, which stepped back from the high-cost race to produce the most advanced chips—opting instead to focus on specialized markets such as radio-frequency chips and automotive semiconductors—has seen increased demand for its products, especially due to a recovery in the smartphone market. Despite this growth, GlobalFoundries continues to face challenges in the industrial and automotive sectors.

In 2024, GlobalFoundries also benefited from government support, receiving approximately $1.5 billion in subsidies aimed at boosting U.S. chip manufacturing.

 

Apple’s Holiday Quarter Sales Affected by AI Delays and Chinese Competition

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Apple is expected to report modest revenue growth for its holiday quarter, with challenges stemming from delayed AI features and heightened competition from Chinese smartphone makers. Analysts predict a slow quarter for the tech giant as its iPhone 16 series, which launched in September, lacked AI features that its competitors, such as Google and Samsung, had already integrated into their devices. While Apple is planning to roll out improved AI capabilities, including updates to Siri, later in the year, these delays have hindered iPhone demand during the crucial holiday-shopping season.

Apple’s struggles with AI were further underscored when the company had to retract a news-summarizing AI tool that was criticized for inaccuracies by media outlets like the BBC. Jane Hepburne Scott, an investment manager at Aegon Asset Management, emphasized that Apple’s slower adoption of AI has contributed to a decline in its competitive standing and loss of market share.

Adding to Apple’s woes is fierce competition from Chinese smartphone manufacturers, particularly Huawei. The company’s global smartphone market share dropped to 23% in the last quarter of 2024, down from nearly 25% the previous year, with an even sharper decline in China, where its share fell by 10 percentage points to 17%. While the Chinese government has been subsidizing domestic smartphone purchases, these incentives primarily target budget-friendly phones, not high-end models like the iPhone.

Despite these challenges, Apple’s services division, which has been growing steadily, is expected to post a 12.9% increase in sales. However, the overall forecast for the quarter remains underwhelming, with analysts expecting just a 3.8% revenue growth for the period, significantly below the 6.1% growth from the September quarter.

Further complicating matters for Apple is the strengthening of the U.S. dollar, which has risen nearly 8% against major currencies, potentially making it harder for Apple to surpass sales expectations in international markets.