Qualcomm Inc. QCOM 6.00% says its get-them-where-you-can approach to navigating the global semiconductor shortage is working, though the mobile-phone chip giant sees the supply crunch lasting into next year.

Qualcomm, which supplies key circuitry in almost a third of new 5G handsets, has managed to secure more capacity at outside manufacturers where it has its chips made, Chief Executive Officer Cristiano Amon said in an interview.

In some cases the company says it is having multiple vendors produce the same type of chip to boost its supply. Demand for Qualcomm’s products, however, is still outstripping its ability to supply them, Mr. Amon said as the company posted quarterly earnings Wednesday.

Chief Financial Officer Akash Palkhiwala said he expects that Qualcomm is “going to be constrained into early 2022, and then I think there’s a lot of [chip-making] investments being put into place, so that by the time we get to the second half we’ll be in a better place than we are.”

The supply strains are showing little sign of hurting the company financially. Strong interest in 5G phones, especially in China, led Qualcomm to suggest that sales of 5G phones this year would be biased toward the upper end of an earlier forecast of 450 million to 550 million devices. The upbeat outlook came even as Apple Inc., a major Qualcomm customer, warned Tuesday that supply constraints would extend to its smartphones during the three-month period ending in September.

Qualcomm reported revenue of $8.1 billion for its fiscal third quarter, ending in June. The sales exceeded a $7.5 billion consensus projection from analysts surveyed by FactSet and surpassed the company’s own guidance. The company also said sales in the current quarter could reach $9.2 billion, which would be a record and ahead of Wall Street expectations.

As the company tries to capture the growing 5G handset market, Mr. Amon, who was named to the top job in January and formally took over as CEO last month, said it was also increasingly becoming more than just a phone-chip company. The company is on pace to deliver $10 billion of annual revenue from non-handset businesses, including those focused on the automotive sector and internet-of-things devices, he said.

Net profit of about $2 billion for the quarter was more than double the figure in the year-ago period and beat Wall Street expectations.

Qualcomm is at the center of a chip-supply crunch that has shaved billions of dollars off auto makers’ revenues, raised prices for consumer electronics and spread to an increasing number of industries. The work-from-home economy during the Covid-19 pandemic has boosted demand for internet services and tech companies’ products, contributing to the outsize demand for chips.

Intel Corp. CEO Pat Gelsinger said last week that the shortage could stretch into 2023, although he expected the bottom to be this year.

Advanced Micro Devices Inc., another chip maker, said Tuesday that supply-chain bottlenecks should improve next year.

By: DocMemory
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