Insight Bite

With difficulties in supply, Qualcomm has shown that execution is a fundamental factor when functioning in a tight global supply chain. This is its major 2021 differentiator when faced with continuing availability issues.

Qualcomm has demonstrated that great management and keen focus on delivery has yielded good results when others have struggled. FQ4 2021 revenues were $9.3bn whereas forecasts had been $8.9bn. Contrary to the general industry trend, Qualcomm is looking towards an even more profitable next quarter. FQ1 2022 revenues are expected to show $10.0bn – $10.8bn  as opposed to consensus at $9.7bn.

This also flies in the face of the majority of vehicle OEMs that have been forced to reduce production as a consequence of component shortages. The knock-on effect has been a corresponding reduction in advertising as any increase in demand would be unfulfilled.  This has been pretty typical during Q3 2021.

It appears Qualcomm did whatever they could to alleviate the supply shortages. It has been first off the blocks regarding the most difficult versions of 3G, 4G and 5G technology. This keeps it in a strong position within the wireless semiconductor market and the industry sees Qualcomm as providing prototype chips that actually work.

This is important in a market that is still struggling. As a consequence, Qualcomm is out there on its own and any figures are company specific and definitely not a reflection of current industry performance. This means that at present the short-term outlook remains unchanged with only some alleviation in stock shortages by H1 2022.  Yet it is worth noting that this will probably represent this super cycle apex.

This means Qualcomm remains strong because of their execution and approach so their valuation also remains attractive. Their fine-tuned approach to execution suggests they are more than likely to hit the estimate forecast.