Qualcomm hits record high after it tells investors it will grow without Apple

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  • Qualcomm stock rose 7% on Tuesday after issuing bullish forecasts at an investor conference in New York.
  • Qualcomm is best known as a supplier of wireless chips and processors for mobile phones, but on Tuesday it said it has diversified its business.
  • Qualcomm currently supplies wireless connectivity chips for Apple’s devices, but Qualcomm said it predicts it will supply only 20% of the modem chips needed for the 2023 iPhone.

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Qualcomm stock rose 7% on Tuesday after it issued bullish forecasts at an investor conference in New York and said its growth does not depend on relationships with a single customer, such as sales of its modem chip to Apple. .

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“This company can no longer be defined by a single market and a single end customer,” said Qualcomm CEO Cristiano Amon.

Qualcomm currently supplies wireless chips for Apple’s devices, but said it expects to provide just 20% of the modem chips needed for the 2023 iPhone. Company officials declined to say what percentage of its current revenue comes from Apple. The company reported $27 billion in total chip sales in 2021.

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Qualcomm said it expects its entire chip business, called QCT, to grow at least 12% by 2024, even as it predicts Apple’s own chip business by the end of 2024. The “low single-digit” percentage of sales in the U.S. will decline in sales.

“As we continue to invest in leading RF front end technology, there is an opportunity to supply Apple. But as this relates to Apple, we do not make any assumptions other than what we have in the plan.” “So everything at Apple, we should be thinking upside down.”

An Apple representative did not immediately return a request for comment. Apple bought Intel’s modem business in 2019 and is working on its own wireless 5G technology, but has not publicly discussed its modem plans.

Qualcomm’s CFO Akash Palkiwala said the company’s primary strategy in phones is to power high-end Android devices.

Analysts were looking for these signs as Qualcomm went to the company’s investor day.

“The ability for Apple to eventually internalize its own chipsets remains an overhang on the stock’s multiple, and we believe many investors are looking for some sort of clarity on earnings power levels.” Which they can underwrite without the Apple chips in the model,” Bernstein analyst Stacey Rasgon wrote in a note on Monday.

While Qualcomm is best known as a supplier of wireless chips and processors for mobile phones, it said it has diversified its business and more than a third of its sales are now driven by chips that are used for other types of devices such as PCs, automobiles, and more. Provides power to the equipment. and virtual reality headsets.

For example, Qualcomm also said that sales of its IoT chips, the low-power chips needed for smart devices, would generate up to $9 billion in revenue by 2024, up from $5.06 billion in 2021.

Similarly, the company said on Tuesday that its automotive business could reach $8 billion in sales over the next 10 years, down from $1 billion in 2021. Part of this will be achieved through a new partnership with BMW in which Qualcomm will provide the chips for itself. -Driving cars.

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