Qualcomm's Optimism Amid Tariffs

By Stephen Nellis

(Reuters) – Qualcomm executives expressed optimism regarding President-elect Donald Trump's administration, stating they are not worried about proposed U.S. tariffs potentially affecting their sales in China.

During an investor event in New York, Qualcomm forecasted $22 billion in revenue from various sectors over the next five years, stepping beyond their smartphone focus. Executive Alex Rogers noted a strong relationship with Trump’s previous administration, which blocked a takeover by rival Broadcom.

CEO Cristiano Amon mentioned he anticipates no significant business competition issues in China, which accounted for 46% of Qualcomm's nearly $40 billion revenue last fiscal year, despite Trump's proposed tariffs on Chinese imports.

Currently, Chinese firms continue to purchase Qualcomm's automotive chips, and previous tariffs have not harmed the company. Amon noted that geopolitical issues actually increased partnerships with China as Qualcomm expanded into other industries.

Qualcomm previously faced challenges with U.S.-China trade tensions, such as abandoning a $44 billion takeover of NXP Semiconductors after failing to gain Chinese approval.

For fiscal 2024, Qualcomm reported $8.32 billion in revenue from chip categories aside from smartphones, accounting for about a third of their $24.86 billion from smartphone chips.

With diversifying offerings, Qualcomm has secured deals to supply automotive chips and collaborated with Microsoft and PC makers to challenge Intel and AMD in the laptop market.

Additionally, Qualcomm faces revenue decline from Apple, which is developing its own modem chips. However, Qualcomm expects new categories to offset those losses, projecting $8 billion from automotive chips, $4 billion from PCs, $2 billion from augmented reality devices, $4 billion in industrial chips, and $4 billion for IoT chips by fiscal 2029.

In fiscal 2024, IoT revenue fell to $5.4 billion, failing to meet the forecast of $9 billion made in 2021. Qualcomm's shares have risen about 13.7% this year, lagging behind the 25% increase in the Nasdaq Composite, as their business remains heavily reliant on smartphones, with Apple, Samsung, and Xiaomi contributing over half of their recent $39.96 billion revenue.