Mobile technology giant Qualcomm posted strong financial results on Wednesday, dodging the worst of semiconductor supply shortages while riding a wave of improving smartphone demand, particularly in China.

Looking ahead, the San Diego company delivered a rosier forecast for the current quarter than it previously implied —predicting sales and profits above Wall Street analysts’ expectations.

The more bullish outlook drove the company’s shares up 5.5 percent in after-hours trading to $144.35 on the Nasdaq exchange.

“Even this fiscal year, with all the unusual challenges, we are on track to deliver results better than what we expected,” said Chief Executive Steve Mollenkopf, who is retiring at the end of June. “I cannot underestimate the long-term opportunity for Qualcomm.”

For the quarter ended March 28, Qualcomm’s revenue increased to $7.9 billion, up 52 percent over the same quarter last year. Adjusted earnings rose 115 percent to $2.185 billion, or $1.90 per share.

Wall Street analysts predicted sales of $7.6 billion and adjusted earnings of $1.67 per share for the quarter.

“Quite a parting earnings report for Steve Mollenkopf as Qualcomm enters a new era,” said Geoff Blaber, a mobile technology analyst with industry research firm CCS Insight in a social media post. “Double-digit growth for all segments, and a statement of confidence that supply constraints will improve significantly.”

Qualcomm maneuvered through a couple of roadblocks in the fiscal second quarter. The semiconductor industry continues to be hamstrung by supply shortages — which meant the company was unable to keep pace with demand.

“It is going to get better at the end of the year,” said CEO-Elect Cristiano Amon. “Some of the orders that we still can’t fulfill, we expect to see by the end of the year and into 2022 a much more favorable supply environment.”

As semiconductor manufacturing capacity increases, Qualcomm thinks it can capitalize on Huawei Technologies’ exit from the smartphone business.

U.S. sanctions prevent Huawei — China’s top smartphone maker — from accessing American technology. Rivals such as Xiaomi, Oppo, Vivo are stepping into the void.

Qualcomm was not a big supplier to Huawei. But it’s a top chip provider to these other Chinese handset brands. Amon said there’s a $10 billion market opportunity for Qualcomm as these Huawei rivals gain share.

With 5G, Qualcomm also is supplying more processors inside smartphones than it has in the past. Sales of radio frequency chips that filter and amplify radio signals rose 39 percent to $903 million in the quarter. The company affirmed its forecast of 450 million to 550 million 5G handset shipments for calendar year 2021.

And Qualcomm’s long-sought goal of diversifying its customer base beyond smartphone makers is getting a bit more traction.

Revenue from non-smartphone, Internet of Things devices grew 71 percent to $1.1 billion — the second straight quarter where IoT sales topped the $1 billion mark.

In automotive, Qualcomm’s revenue increased 40 percent to $240 million. It has a $9 billion order backlog for digital dashboards, telematics, safety, navigation/entertainment and other technologies used in vehicles.

Qualcomm expects sales in the $7.1 billion to $7.9 billion range for the fiscal third quarter. Adjusted earnings are forecast at $1.55 to $1.75 per share.

That’s better than Wall Street’s estimates of $7.1 billion in revenue and $1.52 per share in earnings

During seven years at the helm of Qualcomm, Mollenkopf faced a whirlwind of crises — from legal battles with Apple and global regulators to a $79-per-share hostile takeover attempt from chip rival Broadcom, which was blocked in the 11th hour by the U.S. government.

“Our mission and singular focus on inventing breakthrough technologies — transforming how the world connects, computes and communicates — is important and hard to do,” said Mollenkopf. “Our challenges tightened our focus on this mission, and at the core, innovation was always the solution.

“As a result, Qualcomm enters the 5G era with our whole company stronger and more resilient,” he continued. “Speaking as a soon-to-be-former CEO, I believe there is virtually no limit to where Cristiano can lead Qualcomm.”

By: DocMemory
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