Qualcomm revenues down as China demand drops

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Qualcomm has reported a drop in revenue, but may be set for further losses in coming weeks.

The American chipmaker today released its Q2 earnings, in which we got to see exactly how much money it’s going to pay Apple to get that legal dispute finally out of the way.

Following the release of the earnings, the company’s shares somewhat dropped, which reflected investor sentiment. Despite the large pay check Apple is about to receive, investors were happy to see that Qualcomm found a way to handle the problem, which is why shares didn’t drop further.

According to Reuters, Qualcomm will pay Apple anywhere between $4.5 and $4.7 billion in the third fiscal quarter, for the royalties that it hadn’t paid before.

Settlement aside, Qualcomm estimates between $4.7 and $5.5 billion in revenue, which is generally speaking below the $5.29 billion that the analysts expected.

The company stocks fell 3.5 per cent on Wednesday, but kept most of its 50 per cent gains it had gathered in the past couple of weeks.

Reuters believes the shortfall was ‘driven by a weak Chinese smartphone market’. Qualcomm believes consumers are waiting for new phones with 5G support before making the upgrade.

“We’re looking forward to having a 5G Christmas as the year ends,” Cristiano Amon, Qualcomm’s chip chief, said on a conference call with investors.

Two weeks ago, in what the media described as an 'unexpected' turn of events, Apple has capitulated at Qualcomm's lawsuits, and the two companies came to a mutual agreement.

The settlement also includes a six-year patent license agreement (already in effect, starting April 1), as well as a two-year option to extend. There’s also a multiyear chipset supply agreement.

Image Credit: O2