5G handsets, RF front-end business among expected Qualcomm growth drivers

During a Q1 2019 earnings call this week, Qualcomm CEO Steve Mollenkopf, speaking from the company’s offices in China, identified three 2019 priorities he expects to drive growth and earnings throughout 2019: the transition to 5G in major global markets, resolving a number of ongoing disputes with Apple, and continued execution across its increasingly diversified product portfolios.

Mollenkopf, acknowledging the challenges Qualcomm faced in 2018–Apple instructing suppliers to stop paying royalties, a protracted buy-out attempt from rival Broadcom, and a deal to acquire NXP falling through, called it an “extraordinary year” that made the tech giant a “stronger company” entering 2019.

In Q1 2019, which ended Dec. 30, Qualcomm reported revenue of $4.8 billion, right in the middle of earlier guidance in the $4.5 billion to $5.3 billion range. For Q2 2019, the company expects revenue in the $4.4 billion to $5.2 billion range.

The CEO projected growth throughout the year as the company “drives[s]the transition to 5G. When the world is introduced to 5G early next year, we believe we will be the technology partner in nearly all the commercial launches around the world,” including in North America, China, Japan, South Korea, Europe and Australia. “Transitions in wireless,” he said, “are unforgiving to companies and competitors that are late to these transitions, especially in the initial ramp years.”

Mollenkopf said he expects 5G adoption to outpace adoption of LTE, and said Qualcomm is working with 18 device OEMs that are committed to launch 5G handsets this year using the X50 modem. He said the company has the ability to support 5G NR based on the non-standalone and standalone standards at both millimeter wave and sub-6 GHz frequencies.

The second priority–reaching resolution with Apple through either litigation or settlement–is associated with “billions of dollars in damages.”

Priority three, he said, is to continue execution across core product businesses, including a diversification from the mobile segment driven by a continued ramp in the RF front-end business, as well as in automotive (telematics, infotainment and in-car connectivity) and Wi-Fi.

For its connected car business, Mollenkopf called out a $5 billion “order pipeline” and the world’s first 5G design win with a “leading automaker.”




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