Key insights
- Qualcomm announced a $20 billion share buyback program and increased its dividend. This aims to boost shareholder returns amidst a tepid revenue forecast due to memory chip shortages, particularly impacting Chinese handset manufacturers. Qualcomm is diversifying into automotive, PC, and data center chips, but these new ventures haven't fully offset the smartphone market shortfall. The stock rose 3% on the news.
(Bloomberg) -- Qualcomm Inc., the largest maker of smartphone processors, plans to buy back another $20 billion worth of shares and is raising its quarterly cash dividend as part of a broader effort to bolster shareholder returns while diversifying its business.
The chipmaker’s board has approved the new stock repurchase program, which adds to previous buybacks announced in November 2024, according to a company statement. The San Diego-based company’s quarterly dividend will rise to 92 cents a share from 89 cents after March 26. Its annualized dividend payout will increase to $3.68 a share.
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Last month, Qualcomm issued a tepid forecast for revenue, saying a global shortage of memory chips means some of its customers, particularly those in China, will be making fewer handsets. Chief Executive Officer Cristiano Amon has been working to transform the company into a more diversified seller of chips for cars, personal computers and data centers, but the new businesses haven’t generated enough to make up for the shortfall in its main market.
The company’s shares were up about 3% at 9:41 a.m. in New York.
Amon said in the company’s statement on Tuesday that he remains “focused on stockholder returns and executing on our ongoing diversification opportunities.”
Major technology companies are buying up more memory chips than ever before to secure capacity for artificial intelligence systems. That’s prompted chipmakers to allocate more of their production to these higher-margin orders, leaving fewer memory chips available for others such as consumer device manufacturers and carmakers. Costs of some memory products have surged as a result.
Qualcomm has been trying to get into the lucrative market for AI data center components and late last year announced products that will attempt to go directly up against Nvidia Corp.’s dominant offerings. It has said that the first shipment of that lineup is expected next year, and the initial customer will be Humain, the AI startup backed by the government of Saudi Arabia.
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