Qualcomm (NASDAQ:QCOM) cut its outlook for the second half of its fiscal year in part because it disclosed that its Snapdragon 810 processor "will not be in the upcoming design cycle of a large customer's flagship device."
There have been reports that Samsung Electronics is going to drop the 810 processor for its next flagship smartphone, the Galaxy S6, due to overheating issues. However, a Qualcomm representative declined to say which phone maker has dropped the Snapdragon 810, according to Re/code. Samsung is expected to unveil the Galaxy S6 in March.
"We expect not to be in a design launching in the second half of the year," Qualcomm CEO Steve Mollenkopf said in an interview with Bloomberg. He said the Snapdragon 810 processor has no performance issues and will be used in more than 60 other phones. "We're quite pleased with the device--we just wish it had won one more design."
For the fiscal first quarter that ended Dec. 28, Qualcomm's net income rose to $1.97 billion, or $1.17 a share, from $1.88 billion, or $1.09, a year earlier. Sales rose 7.2 percent to $7.1 billion.
Qualcomm said sales for fiscal 2015 will be $26 billion to $28 billion. The company had previously projected revenue of as much as $28.8 billion.
The silicon vendor said its 2015 performance would also be impacted by a shift in its market share among OEMs at the premium smartphone segment, which has reduced its short-term opportunity for sales of its integrated Snapdragon processors and has skewed its product mix toward standalone modem chipsets in that segment. Qualcomm also expects heighted competition in China.
"China continues to present significant opportunities for us, particularly with the rollout of 3G/4G LTE multimode, but also presents significant challenges, as our business practices continue to be the subject of an investigation by the China National Development and Reform Commission," Qualcomm said in a statement. Qualcomm also said that, despite settling one dispute with a licensee in China, it still believes some customers in China are underreporting sales of licensed chips amid a Chinese government probe into Qualcomm's licensing practices.
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