The ongoing coronavirus crisis could have a negative impact on the entire mobile industry, affecting the supply chain and demand, Qualcomm has warned.
There have so far been more than 28,000 confirmed cases of the virus in China, resulting in 563 deaths. With China being both a major manufacturing hub and significant market for the sector, there are concerns that the disruption could be significant.
Many companies have instructed employees to work from home and to minimise travel, however the technology sector is viewed as a “critical” industry, exempt from many restrictions. Huawei and Samsung are among those that have continued to operate production facilities.
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The coronavirus has also affected commercial operations. Apple has temporarily closed stores in China, while LG has pulled out of Mobile World Congress (MWC) in Barcelona. Organisers the GSMA have confirmed the event will go ahead as planned, however.
Qualcomm said it expected “significant uncertainty” as a result of the outbreak, noting that the wider range of its Q2 forecast was a direct result. However it moved to ease any investor concerns, stressing it could mitigate any potential disruption.
“If we have an issue, a supply chain issue or demand issue in China, we tend to have the ability to have other regions to back it up,” Steve Mollenkopf, Qualcomm CEO is quoted as saying . “So we tend to look at the business in terms of our planning. We want to make sure that we maintain that strength across different markets.”
The company reported better than expected Q1 results, suggesting a global slowdown that has affected many major players in the chip market was coming to an end. Revenues rose five per cent to $5.05 billion and expects the Q2 figure to be between $4.9 billion and $5.7 billion.
Mollenkopf suggested that demand for 5G components was a contributory factor to the upturn, with the company’s RF front-end products being used in the majority of next-generation handsets.
"Our strong fiscal first quarter financial performance reflects a significant inflection point for Qualcomm as we begin to realize the benefits from the ramp of 5G,” he said.
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