Over the last few weeks, there have been plenty of eyebrow-raising disclosures from tech companies as they've talked shop during earnings calls and at investment conferences.
Here's the first in a series of pieces looking at some of these significant disclosures. This one focuses on comments shared by chip companies.
1. Texas Instruments Expects Orders to Soften Due to Macro Pressures
When asked during a May 13 JPMorgan conference talk about why Texas Instruments (TXN) expects order trends to continue softening in the near-term following strength in March and early April, CFO Rafael Lizardi argued that macro pressures will lead end-market demand to weaken, which in turn will impact customer orders.
"The reason we think that [demand will] abate is that we're in the middle of a recession. So with people around the world staying at home, working from home, demand consumption is just not what it used to be," Lizardi said. "I think at this point it's a foregone conclusion."
Notably, Lizardi also suggested TI's heavy reliance on a consignment sales model -- a model in which products are kept in inventory for individual customers, with customers requesting them only as needed -- doesn't necessarily mean that its current, consignment-based sales reflect end-market demand, because customers "are kind of driving blind" when it comes to making ordering decisions.
2. Qualcomm Thinks 5G Phones Now Account for About 40% of Chinese Phone Shipments
During his JPMorgan conference talk, Qualcomm (QCOM) president Cristiano Amon mentioned that the most recent data his company has received about phone sell-in (i.e., phone shipments to resellers such as carriers and electronics retailers) indicates about 40% Chinese phone shipments now involve 5G phones. That's up from 19% in December and 30% in calendar Q1.
Strong Chinese 5G phone demand was one of the reasons Qualcomm, which has estimated it gets about 50% more chip revenue on average from a 5G phone relative to a comparable 4G phone, maintained its full-year guidance for 175 million to 225 million 5G phone shipments. This reiteration occurred even though Qualcomm pulled its guidance for 1.75 billion to 1.85 billion 3G/4G/5G device shipments and forecast total phone sales will be down about 30% annually in calendar Q2.
3. Microchip Has Seen Chip Orders for Medical and Health/Sanitation Devices Soar
In line with what many other chip suppliers have shared, Microchip Technology (MCHP) disclosed on its earnings call (held on May 7) that it's seeing strong demand from data center and telecom infrastructure clients, and soft demand from automotive, industrial, home appliance and aerospace clients. However, the company also reported seeing a major pickup in demand from medical and health device verticals.
COO Ganesh Moorthy said demand has risen not only for "COVID-19-related items like ventilators, respirators, oxygen monitors and ultrasound machines," but also for "a host of other hospital equipment needed for increased patient loads," as well as for "contact-free consumer and industrial products like hands-free dispensers [for] soap, water, paper and sanitizers." He also mentioned that Microchip has seen stronger demand from retail end-markets for infrared thermometers and barcode readers.
CEO Steve Sanghi added that ventilator demand has risen by 100x or more. "A hospital [previously had] two to three ventilators only for emergency purposes. And now a single hospital is requiring 1,000 to 2,000 ventilators," he said.
4. Qorvo Thinks Its Total RF Chip Opportunities Within Some 5G Base Stations Could Top $1,000
When asked about how much Qorvo (QRVO) sees its RF content growing in 5G base stations relative to their 4G counterparts, CEO Bob Bruggeworth asserted that Qorvo's content could rise tenfold within 5G base stations featuring massive MIMO antenna arrays, with the total value of Qorvo's opportunities reaching $1,000 to $1,200.
Bruggeworth qualified his remarks by noting the exact size of Qorvo's opportunity will depend on whether a base station features 16, 32 or 64 antennas (and related RF signal chains). His comments arrived a week after Qorvo forecast its Infrastructure & Defense Products (IDP) unit, which depends heavily on base station-related sales, will grow sequentially and return to annual growth during the company's June quarter.
