The mobile phone market is showing signs of recovery with differentiation between Qualcomm (QCOM.US) and Arm (ARM.US) in the industry.

Notice that Qualcomm (QCOM.US) and Arm (ARM.US), two chip companies heavily reliant on the smartphone market, released their financial reports on Wednesday showing that the smartphone industry is facing a tough recovery. Both companies indicated that demand for high-end models is recovering, but did not indicate that the industry as a whole has stabilized. Qualcomm's report received a better response, with optimistic sales forecasts helping its stock price rise at closing. Meanwhile, Arm's outlook is more cautious, dragging down the company's stock price. Consumers' spending on high-end phones (especially in China) rebounded, helping both companies exceed analysts' expectations for revenue and profit last quarter. Expansion into new areas also supported performance. Qualcomm and Arm are both advancing in the computing sector, with AI spending boosting growth. Qualcomm has successfully entered the automotive chip market. These two companies have been long-time partners but are increasingly becoming rivals, seen as leaders in the smartphone industry. Qualcomm is the largest seller of smartphone processors, while Arm develops most of the underlying technology used in the industry. Both companies are benefiting from the shift towards higher-end phones. While overall shipment volumes only grew by 4%, Arm's mobile revenue grew by 40%. Qualcomm's market share in China is also expanding. This year, Android phone sales revenue in China grew by 40%. The companies expect overall smartphone sales volumes to increase by about 5% or less next year, indicating no widespread recovery in smartphone sales is expected. Many consumers are no longer upgrading their phones frequently, a problem that has been plaguing most companies in the industry. On Wednesday, Qualcomm and Arm released quarterly earnings within minutes of each other and held overlapping conference calls. This is a notable time for the companies amidst their ongoing legal disputes. Arm took a step last month to revoke a license that allowed Qualcomm to use its intellectual property to design chips. Prior to this, Arm sued Qualcomm for breach of contract and trademark infringement in 2022. On Wednesday, Arm forecasted quarterly revenue for December to be between $9.2 billion and $9.7 billion. The midpoint of this range will be below analysts' forecast of $9.509 billion. Qualcomm expects sales this quarter to reach $10.5 billion to $11.3 billion. According to Bloomberg data compiled, analysts' average expectation is $10.5 billion. After deducting certain items, profit will reach $3.05 per share, exceeding Wall Street's expectations. The automotive market is a major highlight for Qualcomm, as the slump in the automotive market has already affected other chip manufacturers, but Qualcomm's automotive chip business revenue has grown by 55% in the 2024 fiscal year. Qualcomm says it has been winning new business, helping it surpass its peers. "I think you should think of our auto revenue as less sensitive to market changes and more tied to new vehicle launches," CEO Cristiano Amon said on a call with analysts. "This reflects the shift in market share."