Qualcomm under pressure: sales forecast falls, shares fall drastically!

Qualcomm under pressure: sales forecast falls, shares fall drastically!

Qualcomm is under pressure after the company presented a disappointing outlook for the coming months. The reason for this is the uncertain economic outlook and US President Donald Trump's tariff policies, which are affecting the company's business processes. CEO Cristiano Amon commented on this and emphasized the focus on controllable factors such as product development and diversification. For the current quarter, revenues between $9.9 and $10.7 billion and adjusted earnings between $2.60 and $2.80 per share are forecast. These developments lead to a six percent decline in Qualcomm shares following the announcement of this outlook, as crown reported.

In the past quarter, Qualcomm was still able to record a 17 percent increase in sales to $10.98 billion and a net profit of $2.81 billion, an increase of 21 percent. Despite these positive figures, the uncertain political situation is dampening demand for computer chips and other electronic items. While some of these products are temporarily exempt from US tariffs, the future remains uncertain. Apple also plans to develop its own modem chips, which affects 27 percent of Qualcomm's sales.

Legal challenges and licensing issues

Additionally, Qualcomm faces serious legal challenges. The company faces the potential loss of its license to use technologies developed by Arm. These disputes arise from Qualcomm's 2021 acquisition of Nuvia, which had its own licensing agreement with Arm. Now Arm has given a 60-day notice to terminate the license agreement, alleging a breach of the terms. Qualcomm, for its part, has countered, claiming that its existing contract with Arm remains valid. This litigation could have a significant impact on the technology industry as it could also affect smartphones, laptops and other devices such as Tom's Guide reported.

The Oryon CPUs used for the Snapdragon 8 Elite chip could also be affected. If Qualcomm loses the license, the company would have to quickly find alternative chip solutions. There is the possibility of reaching separate agreements to temporarily use Arm's full chip designs, but this would incur additional costs. Within the 60-day period, both companies still have a chance to reach a compromise before further legal action is taken.

Global challenges in the semiconductor industry

The challenges facing Qualcomm are part of a larger shift within the semiconductor industry. This industry has developed a broad portfolio of semiconductors in recent years, driven by breakthrough inventions and dynamic, often difficult to predict, demand. The focus is on topics such as the increasing importance of diversification and new business models. Deloitte highlights that global supply chains in the chip industry are under increasing strain following the COVID-19 pandemic and the Ukraine conflict.

Current forecasts show that global chip industry revenue is expected to reach $633 billion in 2022, up 55 percent from 2019. Sales are expected to reach $1 trillion by 2030, with chip manufacturing heavily concentrated in East Asia. Dominance in the semiconductor industry can be crucial to national security for countries like Taiwan, as an attack on the region could seriously jeopardize highly sensitive production.