Prime Highlights
- Qualcomm shares surged over 10% on optimism around smartphone recovery.
- The company is expanding into data centre and AI chip markets to drive growth.
Key Facts
- Qualcomm is one of the world’s leading suppliers of smartphone chips.
- The company plans to begin shipping data centre chips later this year.
Background
Qualcomm shares rose sharply in early trading in the last week of April, as investors responded positively to the company’s outlook on its smartphone business and expansion into data centre chips. The stock gained over 10% despite a weaker near-term forecast.
Chief Executive Cristiano Amon indicated that the global smartphone market could begin to recover after the company’s fiscal third quarter. His comments helped ease concerns around slowing handset demand, which has weighed on the company’s performance in recent quarters.
Qualcomm, a major supplier of chips for smartphones, has been working to reduce its reliance on the handset segment. The company is focusing on newer areas such as data centre processors and automotive chips to drive future growth. It plans to start shipping data centre products later this year as part of this strategy.
The shift comes at a time when rising memory chip prices have increased the cost of consumer electronics, affecting demand. At the same time, companies like Apple and Samsung Electronics are increasingly developing in-house chips, adding pressure on suppliers.
The analysts have still been split regarding the future of Qualcomm. While there are some who foresee more difficulties ahead owing to issues relating to the shortage of supply and high prices of smartphones, others look at the bright side in view of Qualcomm venturing into the fields of artificial intelligence and data center technology.
Furthermore, Qualcomm is making efforts to develop newer chipsets, especially processors and AI chips.
