Qualcomm and Arm Post Strong Quarterly Sales Growth
Qualcomm and SoftBank-backed Arm posted strong quarterly sales growth on Wednesday as the chipmakers benefited from better than expected smartphone demand.
Qualcomm’s Revenue Surpasses Expectations
Qualcomm reported revenue of $11.7bn for the quarter to the end of December, above consensus estimates in a S&P Capital IQ poll of $10.9bn and up 17 per cent year on year, and gave March quarter guidance that was above expectations, with a high end of about $11bn.
Arm Beats Revenue Forecasts
Arm also beat revenue forecasts for its quarter to the end of December at $983mn, up 19 per cent year on year. The UK chip designer gave guidance for the current quarter of about $1.2bn, in line with estimates.
Reasons Behind the Growth
Cristiano Amon, Qualcomm chief executive, told investors the company had seen better than anticipated demand for its smartphone products, thanks in part to Samsung’s wholesale adoption of its Snapdragon 8 Elite chips for its flagship new AI smartphone, the S25.
Both Qualcomm and Arm are betting that demand for artificial intelligence features, such as virtual assistants that run on more powerful chips, present a significant growth opportunity. This includes smartphones, where leading device makers Apple and Samsung are investing heavily into new AI assistant features.
Qualcomm’s Partnership with Apple
Qualcomm’s long-running partnership with Apple to supply it with 5G modems is set to come to an end in 2026. Apple is bringing more of its chip design in-house.
Qualcomm’s Diversification Efforts
It is now in the process of diversifying its chip business beyond smartphones into sectors such as automotive computer systems and PCs. On Wednesday it said it believed the recent success of China’s DeepSeek AI models is good news for the on-device AI features that Qualcomm’s chips power, as models become more capable and efficient.
Dispute with Arm
In December, Qualcomm came out on top in a licensing dispute with SoftBank-backed Arm over the technology it uses to build custom “cores” for its chips. A US jury ruled largely in Qualcomm’s favour in the legal dispute, which stemmed from its acquisition of Nuvia in 2021.
Arm’s Involvement in AI Infrastructure
Arm chief executive Rene Haas said the company was also benefiting from the rise of “edge” AI applications on smartphones, applications that can run on the device without needing to connect to a cloud server. Apple, for example, has adopted Arm’s latest “V9” chip architecture for chips in the iPhone 16.
SoftBank’s Grand Strategy for AI
SoftBank founder Masayoshi Son has a grand strategy for AI, which includes Stargate and envisions Arm moving into chip production, say people familiar with the matter.
Conclusion
In conclusion, Qualcomm and Arm’s strong quarterly sales growth is a testament to the growing demand for artificial intelligence features in smartphones and other devices. The companies’ diversification efforts and involvement in AI infrastructure projects are likely to drive future growth.
FAQs
Q: What was Qualcomm’s revenue for the quarter?
A: Qualcomm reported revenue of $11.7bn for the quarter to the end of December.
Q: What was Arm’s revenue for the quarter?
A: Arm reported revenue of $983mn for the quarter to the end of December.
Q: Why did Qualcomm’s shares fall despite beating revenue forecasts?
A: Qualcomm’s shares fell despite beating revenue forecasts due to high expectations and concerns about the company’s ability to maintain its growth momentum.
Q: What is SoftBank’s grand strategy for AI?
A: SoftBank founder Masayoshi Son has a grand strategy for AI, which includes Stargate and envisions Arm moving into chip production.
