Acknowledging some “minor changes” to the timing of some device launches, Qualcomm is still forecasting 5G worldwide device shipments of 175 million to 225 million in 2020.
Reporting its fiscal second-quarter results on Wednesday, Qualcomm said its net income was down 29% compared to the same period last year, reaching $468 million on a GAAP basis compared with $663 million in the prior-year quarter as results were impacted by the global coronavirus pandemic. Qualcomm saw a reduction in demand of 3G/4G/5G handsets of about 21%.
The decline was based on two factors, according to Qualcomm CFO Akash Palkhiwala. There was a pronounced weakness in China in late January and February, which was followed by a substantial recovery in China by the end of the quarter. It then saw a decline in demand in many other regions globally starting in March.
The company is forecasting a 30% reduction in handset shipments for its third fiscal quarter relative to its prior expectations. That’s based on China sales for the quarter gradually improving and other regions seeing a recovery starting in June.
With 5G specifically, “launches across all regions remain on track,” Palkhiwala said during a conference call with investment analysts, according to a Seeking Alpha transcript. “While we expect some minor changes to the launch timing and sell-through of certain devices, our calendar 2020 estimates remain unchanged at 175 million and 225 million units.”
Qualcomm President Cristiano Amon noted that in the month of March, of all the phone models launched in China, 71% of them were 5G, which shows 5G getting to the different price points. China is going to be driving a lot of the 5G volume for the year, and “our position with China remains very strong,” he said.
As for 5G network rollouts, they’re seeing some delays in places like Europe, where spectrum auctions have been delayed. However, in the U.S., some carriers are ahead of schedule, “taking advantage of probably less traffic,” Amon said. In Japan, operators have launched both sub-6 GHz and millimeter wave 5G and Korea Telecom announced a millimeter wave deployment before the end of 2020, he added. “In general, I think the 5G story remains intact.”
The chip maker recently inked license agreements with Chinese handset suppliers OPPO and Vivo, so “we basically got all the top OEMs, but Huawei,” said Alex Rogers, president of Qualcomm Technology Licensing (QTL). “Any major OEM is fully signed up.”
Qualcomm’s third fiscal quarter forecast for QTL doesn’t include revenues from Huawei. It’s estimating QTL revenues of $3.6 billion to $4.2 billion.