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How Apple and Huawei Will Affect Qualcomm’s Fiscal 2018 Revenue

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Qualcomm’s revenue trend

When it came to Qualcomm’s (QCOM) fiscal third-quarter earnings, the cancellation of the NXP Semiconductors deal stole the show. However, its earnings figures were also upbeat. 

The company received $500 million in partial payment of its disputed licensing fee from Huawei, showing some signs of settlement in its licensing business, which generates most of its profits.

The fiscal second and fourth quarters are seasonally strong ones for Qualcomm’s chipset business, which generates most of the company’s revenue. The fiscal first and third quarters are seasonally strong for its licensing business, which generates most of its profit. 

However, its revenue for the fiscal third quarter of 2017 fell by $800 million, as it didn’t receive a royalty payment from Apple (AAPL) due to licensing disputes.

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Fiscal third-quarter revenue

In the fiscal third quarter, Qualcomm’s revenue rose 5.7% YoY (year-over-year) and 7.7% sequentially to $5.6 billion, beating analysts’ consensus estimate of $5.19 billion and topping its guidance of $4.8 billion–$5.6 billion. This YoY growth was driven by the $500 million royalty payment from Huawei. The company’s sequential revenue rise was driven by strong demand for its Snapdragon 845 chipsets from Samsung (SSNLF), Xiaomi, and other handset makers.

Fiscal fourth-quarter revenue guidance

The fiscal fourth quarter is a seasonally strong one for revenue, as Qualcomm supplies modems for Apple’s flagship iPhones, which it launches in September. However, this year things could be different. Qualcomm has stated that it will not provide any modems for Apple’s 2018 iPhone models, which is reflected in its fiscal fourth-quarter revenue guidance of $5.1 billion–$5.9 billion, down 1.7% to 15% YoY. The company’s midpoint revenue guidance of $5.5 billion is still above analysts’ estimate of $5.44 billion.

There’s speculation that Intel (INTC) will be the sole modem supplier for the iPhone 2018 models, as it’s Apple’s only other modem supplier after Qualcomm.

Next, we’ll look at Qualcomm’s profitability.

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