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By Arsheeya Bajwa and Max A. Cherney
(Reuters) - Mobile chip designer Qualcomm on Wednesday forecast third-quarter revenue that would not meet estimates, joining other tech companies such as Snap and Samsung that voiced concerns about the effects of U.S. President Donald Trump's trade war.
Qualcomm third-quarter estimates reflected the impact of the tariffs "as they stand today," Chief Financial Officer Akash Palkhiwala said in a conference call with analysts following the results. But he said the situation could change due to rapid developments in U.S.-China trade tensions.
"We do not see any material, direct impact - there is smaller direct impact and some minor changes in demand," Palkhiwala said, in reference to the tariffs. "(It's) difficult for us to predict."
Qualcomm forecast third-quarter revenue just shy of Wall Street estimates, expecting tepid demand for its smartphone chips. Apple, which is known to be Qualcomm's largest customer, has also begun to produce its own modem chips and is expected by analysts to buy fewer of Qualcomm's modems as it introduces its home-grown chips into more products.
Qualcomm's stock, which was already down more than 3% year to date, sank 6% more in extended trading, as investors have worried about global trade turmoil.
The company's chips are currently excluded from Trump's steep tariffs but slower economic growth will likely hit demand. In a securities filing on Wednesday, Qualcomm said it was uncertain about the effects tariffs and other "related actions" might have on its business.
"Tariff uncertainties will definitely have an impact to its topline outlook as Qualcomm is exposed to the smartphone, consumer IoT and the automotive end-markets," Summit Insights Group analyst Kinngai Chan said.
For its current fiscal quarter, the company expects a sales range with a midpoint of $10.3 billion, below analysts' average estimates of sales of $10.35 billion, according to data compiled by LSEG.
San Diego, California-based Qualcomm is the world's biggest supplier of modem chips that connect smartphones to wireless data networks.
It expects adjusted profits between $2.60 per share and $2.80 per share. The midpoint is above estimates of $2.67 per share.
APPLE-QUALCOMM 'DIVORCE'
Despite mounting competition in China's domestic chip sector, Qualcomm has retained its stronghold of the smartphone market, supplying both Apple and Chinese handset makers such as Xiaomi, Oppo and Vivo.
However, Apple's increasing push toward building in-house modem chips threatens Qualcomm's share of the iPhone makers' silicon components. In the second quarter, Apple accounted for 27% of Qualcomm's revenue, Chan said.