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How Qualcomm is adapting to keep up with high demand

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Brian Sozzi and Julie Hyman speak with Qualcomm CEO Cristiano Amon to breaks down the factors that contributed to Qualcomm’s Q3 earnings beat that saw an increase in revenue due to high demand driving chip sales and Qualcomm’s shares rising in the wake of these earnings.

Video Transcript

JULIE HYMAN: Qualcomm reported its earnings. We talked about this a little bit at the top of the show. We have a double take from Brian Sozzi and I, a special one. Because we had the chance to talk to Cristiano Amon, who is the CEO of Qualcomm. What, he's been the CEO for just about a quarter. This is his first quarter reporting--

BRIAN SOZZI: Yep, first quarter.

JULIE HYMAN: --as CEO. And of course, we asked him about the chip shortage. Listen to what he had to say.

CRISTIANO AMON: Today, despite the fact that we had a great quarter and revenue and EPS exceed the high end of guidance, we still have more demand than supply. If we-- you know, we have demand outpacing supply across all of our business. And we have seen now incredible demand. And we said the last quarter that we expect supply to improve materially by the end of this year. And it's reflected in our increased guide when we look at Q4 fiscal.

And that is a result of two things. One is we had utilized our scale to multi-source products across every available capacity. And we've done that in record time. As an example, one of our multi-sourced products, which is Snapdragon 778G, it's just been already commercialized and in this quarter in record time. So basically, multi-sourcing products across every available capacity. And we put capacity expansion in places with our foundries. And those are going to start to show up at the end of the year.

So we expect to be significantly better or out of the supply crisis towards the end of the calendar year. Still going to be seeing more demand and supply, but at a reduced level in the beginning of 2022. But we expect demand and supply to fully normalize for Qualcomm as we progress in 2022.

JULIE HYMAN: So light at the end of the tunnel--


JULIE HYMAN: --is the bottom line on all of that, right?

BRIAN SOZZI: And that's what we heard from AMD CEO Lisa Su just moments ago. So we're starting to see an easing in that supply shortage. But ultimately, the shortage, for the most part, has been pretty good to the chip space. Look at Qualcomm's results here. I mean, they were up across-- really, across the board here. Their non-GAAP earnings up 123% year over year, sales up 63%. A really big quarter from Qualcomm. Stock is reacting accordingly today.

JULIE HYMAN: It is. All right, we're going to take a quick break.