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Qualcomm Soars as AI Sparks Rebound in Chinese Smartphone Market

Qualcomm's shares surged by 10% as the company signaled a rebound in demand, particularly in China, driven by AI technology. Sales to Chinese smartphone makers increased by 40% in the first half of the fiscal year. Qualcomm's positive outlook is also supported by its IoT and auto segments.

The surge came after the company indicated a rebound in demand, particularly in China, driven by the integration of artificial intelligence (AI) technology.


In the first half of its fiscal year, Qualcomm reported a remarkable 40% increase in sales to Chinese smartphone makers. This surge can be attributed to Chinese buyers' growing preference for higher-priced devices that can accommodate AI chatbots. This shift in consumer behavior has led Chinese vendors, who previously relied heavily on MediaTek, to increasingly adopt Qualcomm's high-end chips.


IDC analyst Nabila Popal commented on this trend, stating, "Chinese vendors who traditionally relied more on MediaTek, are going to start leveraging Qualcomm's high-end chips more as they push hard into the AI Agenda." Popal further emphasised that this shift represents an upside for Qualcomm, as the majority of the market recovery is expected to be driven by Chinese original equipment manufacturers (OEMs) this year, following a challenging period over the past two years.


In addition to the rebound in the Chinese smartphone market, Qualcomm also projected third-quarter sales that exceeded expectations. The company is benefiting from its Internet of Things (IoT) and auto segments, further contributing to its positive outlook.


As the largest supplier of smartphone chips, Qualcomm's market value is set to increase by over $18 billion if the current gains hold during the session. This surge in Qualcomm's shares also had a positive impact on the Philadelphia Semiconductor index, which rose by 1.4% following a 3.5% drop the previous day due to disappointing results from chip firms Advanced Micro Devices and Super Micro Computer.


Preliminary data from research firm IDC revealed that in the high-end segment, the integration of AI technology and the introduction of foldable products allowed Android smartphone vendors to differentiate themselves from Apple. This differentiation garnered increased interest from Chinese consumers in the first quarter of 2024.


Analysts at Wolfe Research expressed optimism about Qualcomm's future prospects, stating, "We're optimistic that numbers can be driven higher, given last year's muted Android cycle and the likelihood of IoT improvement as inventory normalises."


The positive outlook for Qualcomm has led at least 14 analysts to raise their price targets for the company, according to LSEG data. With a 9.7% increase in early trading, Qualcomm's shares reached $180.31, adding to the 13.5% gain it has already achieved this year.


Meanwhile, shares of Apple, which is set to report its earnings after the market closes on Thursday, experienced a modest 1.2% increase.

 
  • Qualcomm's shares surged by 10% as the company signaled a rebound in demand, particularly in China, driven by AI technology.

  • Sales to Chinese smartphone makers increased by 40% in the first half of the fiscal year.

  • Qualcomm's positive outlook is also supported by its IoT and auto segments.


Source: REUTERS

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