Mobile phone chip provider Qualcomm expects smartphone sales to increase significantly in 2021, The Wall Street Journal reports. The company’s forecast is due to the availability of 5G-capable devices like Apple’s new iPhone 12. Qualcomm projects shipments of 450 million to 550-million 5G smartphones in 2021—twice as many as what’s expected to ship this year.
Handset sales were a big portion of Qualcomm’s earnings during the last quarter, according to Chief Executive Steve Mollenkopf. He also noted that the company has seen benefits from other devices that use its 5G chips such as Internet of Things (IoT) devices and networking gear.
“I would argue (COVID-19) has convinced people that these technologies are now even more important than they thought they were,” Mollenkopf said.
Industry anticipates high demand for 5G devices
Both telecommunications providers and industry analysts believe Apple’s recent 5G iPhone launch will only increase the demand for similar devices and services. Verizon CEO Hans Vestberg said during an Apple virtual launch event that people had taken a “wait and see” approach to 5G in the past. When it comes to 5G now however, Vestberg said, “The wait is over.”
Apple’s 5G phones should benefit Qualcomm’s bottom line significantly, according to The Wall Street Journal. The company generated $8.3 billion in revenue last quarter, a 73% increase from this time last year. Almost $2 billion of that revenue came from a one-time payment from Huawei Technologies, Co., but Qualcomm’s sales still increased 35% without it. The arrival of 5G smartphones has helped make up for otherwise lagging sales due to the COVID-19 pandemic.
Qualcomm succeeds amid legal challenges
Qualcomm’s increased earnings are perhaps more impressive considering it had been mired in legal cases for years about how the company licensed patents on certain communications technologies. Regulators and competitors deemed Qualcomm’s practices unfair. Meanwhile, Apple and the Federal Trade Commission (FTC) sued Qualcomm in 2017 because they alleged the company used its standing as a critical chip provider to gain more favorable terms on its licenses. Qualcomm eventually settled the dispute with Apple last year and will likely win its case against the FTC, according to The Wall Street Journal. A federal appeals court declined to revisit a prior ruling that favored Qualcomm. The FTC’s last chance will be an appeal to the Supreme Court.
America’s chip industry has been reshaped in part by the expected demand for 5G products. For example, Marvell Technologies Group announced last month it was acquiring Inphi Corp—a big part of that is for Inphi’s 5G activities. Meanwhile Intel Chief Exec Bob Swan said last month the company might use some of the money it made from selling its flash-memory manufacturing business to invest in 5G.
“Intel intends to invest transaction proceeds to deliver leadership products and advance its long-term growth priorities, including artificial intelligence, 5G networking and the intelligent, autonomous edge,” the company said in a statement.
Joe Dyton can be reached at firstname.lastname@example.org.