Qualcomm is 'positive' on Trump administration as it forecasts growth in chip sales By Reuters

By Stephen Nellis

(Reuters) -Qualcomm executives said on Tuesday they were “positive” about the incoming administration of President-elect Donald Trump and were not concerned that proposed U.S. tariffs would hit nearly half of Qualcomm's (NASDAQ ) sales stemming from China.

Qualcomm executives made the comments at an investor event in New York during which the company forecast $22 billion in combined revenue over the next five years from laptops, cars and other products outside its current stronghold in the United States. smartphones, strong growth compared to its last fiscal year.

During a question-and-answer session with analyst Alex Rogers (NYSE:), who heads Qualcomm's technology licensing business, said the San Diego, California, company had a “great relationship” with the previous Trump administration. , which blocked a hostile takeover bid. for Qualcomm from rival Broadcom (NASDAQ:).

“We look forward to a good relationship going forward. We are very positive about the recent election of Secretary of Commerce, so we look forward to having a good relationship and being committed as we have been during this past administration,” Rogers said, referring to the decision of Trump. expected nomination of Howard Lutnick.

Responding to another question from an analyst, Qualcomm Chief Executive Cristiano Amon said he doesn't foresee any problems competing for business in China, which accounted for 46% of Qualcomm's nearly $40 billion in revenue for the year. most recent tax. Trump has proposed 60% tariffs on Chinese imports, to which economists have said China could respond with its own tariffs on American goods.

For now, Amon said Chinese companies are buying automotive chips from Qualcomm and that Trump's latest round of tariffs on Chinese products did not hurt Qualcomm.

“As geopolitics began to take center stage in the U.S.-China conversation, Qualcomm's partnerships with China actually increased, as we expanded into other industries” beyond smartphones, Amon said.

Qualcomm has been hit by trade tensions between the United States and China before. In 2018, it was forced to abandon a $44 billion deal to buy NXP Semiconductors (NASDAQ:), which would have been the largest chip acquisition worldwide, after failing to achieve Chinese regulatory approval.

In fiscal 2024 that ended Sept. 29, Qualcomm reported revenue totaling $8.32 billion from the same set of chip categories, which was just a third of the $24.86 billion it reported. obtained with smartphone chips.

Qualcomm, based in San Diego, California, is the world's leading supplier of mobile phone chips that connect devices to mobile data networks.

The company has been working to diversify its offering, striking deals with companies such as General Motors (NYSE:) to supply chips for dashboards and driver assistance systems in vehicles, and working closely with Microsoft (NASDAQ:) and PC makers to compete against Intel (NASDAQ and Advanced Micro Devices (NASDAQ in the laptop market.

Qualcomm is also grappling with the long-term decline of its business with Apple (NASDAQ:), which is developing its own wireless modem chips. Akash Palkhiwala, Qualcomm's chief financial officer and chief operating officer, said the new categories would offset those sales losses.

“This annual revenue growth far exceeds the scale of current revenue from Apple's chipset business,” he said during the event.

Qualcomm said it expects $8 billion in revenue from automotive chips by fiscal 2029, and $4 billion from PCs. Expect $2 billion in augmented and mixed reality headsets, like those made by Meta Platforms (NASDAQ:) that already feature Qualcomm chips.

The company expects $4 billion in industrial chips that help connect factory machines to networks, as well as $4 billion in chips for the Internet of Things (IoT), a broad category that includes devices such as wireless headphones. and smart home devices like cameras.

In the just-reported fiscal 2024, the company posted a drop in IoT revenue to $5.4 billion, well below its own forecast from a similar investor day in 2021 of $9 billion for fiscal 2024.

Qualcomm shares are up about 13.7% so far this year, only about half of last year's 25% gain.

Its business remains very focused on smartphones. Along with Apple, Samsung Electronics (KS:) and Xiaomi (OTC:) help account for more than half of the company's $39.96 billion in revenue during its most recent fiscal year.