Through a press release, Qualcomm Inc (Nasdaq: QCOM) has revealed that its automobile order backlog has risen to $30 billion, an increase of over $10 billion since the chip designer published its third quarter results in the final week of July.
In particular, the wireless technology leader has stated that the increase in orders is an outcome of path-breaking designs endorsed by auto manufacturers and Tier-1 vendors. The company boasted that it had become the automotive sector’s preferred chip supplier for new-era vehicles. The stock closed at $121.19, down $2.49 or 2.01% from its prior close.
San Diego, California-based Qualcomm stated that the surge in backlog (future orders) was primarily due to its Snapdragon Digital Chassis system, employed by car manufacturers and their suppliers. The information was provided by Qualcomm at its maiden Automotive Investor Day.
The Snapdragon Digital Chassis facilitates aided and autonomous driving, in addition to in-car infotainment and cloud linking. The exponential increase in electric vehicles and constant inclusion of autonomous features in cars has led to a jump in the count of semiconductor chips used by auto manufacturers. Hence, the business received from the automotive sector plays an important part in the growth of semiconductor industries.
Akash Palkhiwala, Qualcomm’s CFO, highlighted the fact that even an entry-level car uses $200 worth of chips, and it goes up to $3,000 in premium segments. The CFO also expects the product mix to move towards the higher end, which in turn will keep fueling the business opportunity.
In particular, Qualcomm expects that chip demand from the automotive market could increase to as much as $100 billion by 2030.
For FY 2022, the firm forecasts its revenue from automotive businesses to be roughly $1.30 billion, an increase from $975 million in the previous fiscal year. By FY 2026, Qualcomm forecasts the revenue to hit $4 billion. Likewise, by FY 2031, the company projects revenue of more than $9 billion from its automotive business.
Qualcomm has also entered into an expanded collaboration with Mercedes-Benz Group AG, which will integrate the Snapdragon Cockpit system into its car infotainment platform starting next year.
The company has several automotive clients in China. With regards to recently announced restrictions on chip exports, Qualcomm’s CEO Cristiano Amon stated that robust collaborations between Chinese and US firms would ensure equilibrium in the overall scenario. He further stated that the company continues to monitor the developments.
Notably, a week before, Nvidia Corp (NASDAQ: NVDA) rolled out a fresh automotive central computer referred to as drive thor to offer autonomous and aided driving in addition to in-car digital experience and other facilities.
The news of a surge in order backlog is expected to turn the stock price of Qualcomm slightly bullish in the short term.
The historical price chart indicates that the stock of Qualcomm is descending after failing to break resistance at 140. The next support is anticipated only near 110. Additionally, the stock is trading below its 50-day moving average while the MACD indicator has formed a bullish reversal pattern. Therefore, we anticipate the stock price of Qualcomm to remain in an uptrend in the short term.
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