Qualcomm's Snapdragon woes mount as a 'major customer' defects

Qualcomm's Snapdragon 810 has been dropped from a 'flagship device'

Qualcomm has hyped up its 64-bit Snapdragon 810 as the most advanced mobile processor on the market, but its exclusion from an upcoming "flagship device" is causing it some financial grief.

On Wednesday, Qualcomm warned that its chip division will haul in less revenue than expected in the second half of the year, in part because the 810 "will not be in the upcoming design cycle of a large customer's flagship device," Qualcomm said.

That customer could be Samsung, which reportedly dropped the 810 from its upcoming Galaxy S6 smartphone because of overheating issues.

Samsung uses an older Snapdragon chip and its own Exynos processor in the Galaxy S5. Unlike Snapdragon, the Exynos part lacks an integrated modem.

The Snapdragon 810 is considered an advanced chip for its ability to render 4K video and support LP-DDR4 memory and the latest wireless technologies. But it's struggling a bit nevertheless.

Another issue, Qualcomm said, is that there's been a shift in market share among the top device makers, reducing its opportunity to sell Snapdragon chips and skewing sales toward modem parts. It also blamed its lowered forecast on heightened competition in China.

Still, Qualcomm's quarterly earnings reported Wednesday looked healthy. Its revenue was $7.1 billion, up 7 percent from a year earlier, and profit was $2 billion, up 5 percent.

Qualcomm recently settled a dispute with a licensee in China. But it's still being investigated by China's National Development and Reform Commission, which accuses Qualcomm of abusing its dominance to overcharge device makers in the country.

Qualcomm's shares were trading 8 percent lower in the after-hours stock markets Wednesday, after ending the regular trading day at $70.99.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

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Tags business issuesfinancial resultsqualcomm

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Agam Shah

IDG News Service
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