Chip makers beat analysts' expectations

SAN FRANCISCO—In another signal that the semiconductor market recovery remains in full swing, chip makers Qualcomm Inc., SanDisk Corp. and Intersil Corp. all reported quarterly results that exceeded consensus analyst expectations.

Qualcomm (San Diego) reported a first quarter net income of $774 million on revenue of $2.66 billion.

Sales declined nominally compared with the previous quarter, but increased by 8 percent compared with the year ago quarter, Qualcomm said. First quarter net income swung to the positive compared with the year ago quarter, but was down from a net income of $841 in the previous quarter, Qualcomm said.

Consensus analyst expectations had called for Qualcomm to report quarterly revenue of $2.63 billion, according to Yahoo Finance.

In a statement, Paul Jacobs, Qualcomm chairman and CEO, said the company's quarter was driven by healthy shipments of chips supporting 3G phones. The number of 3G subscribers worldwide has now surpassed 1 billion, Jacobs said.

While Qualcomm's revenue and profit declined sequentially, industry wide revenue for all semiconductors used in cell phones in the calendar first quarter amounted to $9.4 billion, up 4.6 percent from $9 billion in the fourth quarter of 2009, according to a preliminary estimate from market research firm iSuppli Corp. This sequential growth in sales runs contrary to the normal seasonal pattern, wherein cell-phone-related semiconductor sales decline in the first quarter from the holiday-driven peak in the fourth quarter, the firm said.

"The unusually strong conditions in the global mobile phone semiconductor market in the first quarter mainly were driven by the smartphone segment and rising sales of 3G handsets," said Francis Sideco, principal analyst for wireless communications at for iSuppli. "Smartphones contain more semiconductor content than plain cell phones, and their share of total mobile handset shipments is rising. Meanwhile, 3G phones also carry a higher semiconductor content than the older 2G models, and represent an increasing portion of total cell phone sales."

Sideco said Qualcomm has in recent times been losing market share in mobile handset ICs to competitors including ST-Ericsson, Infineon and MediaTe. The trend likely continued last quarter, he said.

Qualcomm's stock took a hit Wednesday when investors reacted to the company's sales targets for the current quarter and fiscal year. Qualcomm said it expects revenue for the current quarter to be between $2.5 billion and $2.7 billion, which would represent a year-to-year decrease of between 2 and 9 percent. For the fiscal year, Qualcomm said it expects revenue of between $10.4 billion and $11 billion, which would be roughly flat to up 6 percent compared with fiscal 2009.