Qualcomm Is Finally Cleaning Up

 Qualcomm Is Finally Cleaning Up

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A robot served coffee at the booth of Qualcomm at the 2020 China International Fair for Trade in Services in Beijing in September.

A robot served coffee at the booth of Qualcomm at the 2020 China International Fair for Trade in Services in Beijing in September.

Photo: Pan Siwei/Zuma Press

The new 5G iPhones are a clear boon for
Qualcomm.
And luckily for the chip maker, it now has more to its story.

Both were on sharp display in Qualcomm’s fiscal fourth quarter report late Wednesday. Revenue from the sale of chipsets for smartphones and other devices soared 38% year over year to nearly $5 billion for the quarter ended Sept. 27, while the midpoint of the company’s projected range for the December quarter reflects an 80% surge—the highest growth rate for that segment in at least a decade. This is the quarter that will include the launch of
Apple Inc.’s
new iPhone 12 models, which will mark Qualcomm’s return to the pioneering smartphone following years of shutout as the two companies battled in the courts.

That dispute was settled last year, making Qualcomm’s inclusion in the new iPhone lineup a well-known benefit before the report. But the boost was much larger than Wall Street was anticipating—helped by Apple’s surprise decision to include the more expensive millimeter wave 5G format in all of the iPhone 12 models destined for the U.S. market. Qualcomm’s results and forecast were thus well above Wall Street’s projections, sending the stock up more than 13% Thursday.

But Qualcomm now has more going for it than just getting a piece of the latest iPhone. The company’s settlement with Huawei earlier this year removed the last major holdout on its licensing business. Another legal hurdle got cleared up last month, when a federal appeals court turned down a request from the Federal Trade Commission to reconsider its decision to effectively toss out the government’s antitrust case against Qualcomm. That leaves the FTC with only the long-shot option of taking the matter to the Supreme Court.

The company is also broadening its chipset exposure beyond the iPhone’s modem slot. The fourth-quarter results were the first in which Qualcomm has broken out sales to other chip-market segments, such as radio-frequency components for smartphones as well as chips used in autos and Internet of Things applications. The latter two alone generated nearly $3.7 billion in revenue in Qualcomm’s latest fiscal year. Given how relations with Apple can turn contentious, it helps to have more diversity in the basket.

Write to Dan Gallagher at dan.gallagher@wsj.com