Qualcomm’s revenues to surge from 5G chip sales in 2020

Qualcomm’s chips will be required to fully utilize the increase in speed promised by 5G networks.

In a development that potentially hints at Apple Inc’s impending launch of 5G models in 2020, Qualcomm Inc disclosed, it expects 200 million 5G smartphones to be sold in 2020.

Next-generation 5G smartphones, set to debut next year in a big way, are expected to make tasks such as watching videos or playing games on mobile networks as good as or better than on a Wi-Fi connection.

The creation of 5G networks next year will benefit chipmakers such as Qualcomm, since smartphones will require more chips to fully utilize the increase in speed.

Incidentally, Apple has yet to disclosed when it will launch 5G iPhones, however, in an investors call, Qualcomm’s Chief Financial Officer, Akash Palkhiwala, said there would be “two inflection points” for 5G chips next year.

One is likely to be in spring, when smartphone makers including Samsung, tend to introduce new phones and “The second inflection point will be in the fall time frame, when another set of flagship devices will adopt 5G,” said Palkhiwala.

Fall is when Apple and Alphabet Inc launch new models, said Kinngai Chan of Summit Insights Group while adding he expects Apple to adopt Qualcomm’s 5G modem chip for some those devices.

Qualcomm’s 5G market estimate, disclosed during a fourth-quarter earnings report, is the first from the company.

Although Qualcomm’s rivals, such as MediaTek Inc, Huawei Technologies Co Ltd and Samsung Electronics Co Ltd also produce 5G chips, the U.S. chipmaker stands to gain significantly from patent licensing revenue from almost every 5G device sold in the market. Qualcomm also sells chips for many of the most expensive handsets.

Qualcomm’s 5G devices estimate is nearly 60% higher than research firm IDC’s 123.5 million forecast and Goldman Sachs’ 120 million.

According to Patrick Moorhead of Moor Insights & Strategy, Qualcomm’s close relationship with phone makers made its number credible.

“Given Qualcomm actually has to put orders into its foundries and those numbers were provided on an investor call, I’d bank on the Qualcomm number,” said Moorhead.

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