Earnings Call Transcript - QCOM Q4 2021

Operator, Operator

Ladies and gentlemen, thank you for standing by. Welcome to the QUALCOMM Fourth Quarter and Fiscal 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. If you would like to ask a question during this time, press star then the number one on your telephone keypad. To withdraw your question, press star, then the number two. If you are using a speakerphone, please pick up your handset before pressing the numbers. Please limit your questions to one question and one follow up. As a reminder, this conference is being recorded November 3rd, 2021. The playback number for today's call is (877) 660-6853. International callers please dial 201-612-7415. The playback reservation number is 13723721. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez-Hodoyan, please go ahead.

Mauricio Lopez-Hodoyan, Vice President of Investor Relations

Thank you. And good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question-and-answer session. You can access our earnings release in a slide presentation that accompanies this call on the Investor Relations website. In addition, this call is being webcast on qualcomm.com and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G. You can find the related reconciliations to GAAP on our website. We will also make forward-looking statements that contain projections and estimates of future events, business or industry trends, or business or financial results. Actual events or results may differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now to comments from QUALCOMM's President and Chief Executive Officer, Cristiano Amon.

Cristiano Amon, CEO

Thank you, Mauricio, and good afternoon everyone. Thanks for joining us today. As the pace of digital transformation of industries accelerates and as devices become connected and more intelligent, our broad portfolio of technologies and solutions is creating a significant long-term growth opportunity for us. As you can see from our results, the performance in our chipset business led to record fiscal fourth-quarter non-GAAP revenues of $9.3 billion and record non-GAAP earnings per share of $2.55. Notably, this is our fifth consecutive quarter of greater than a 100% year-over-year EBT growth in our chipset business. We also demonstrated revenue diversification with combined RF Front End, automotive, and IoT fiscal '21 revenues exceeding $10 billion, an increase of 69% year-over-year. Going forward, our chipset business represents the largest growth engine for us, as virtually all devices at the Edge adopt mobile technologies. We have the relevant technologies required to continue to lead in the mobile and connected intelligent Edge. As the Edge gains scale in connectivity and adopts on-device artificial intelligence, we're well-positioned to become a leader in AI processing. Let me now briefly highlight the strong momentum we continue to see in IoT across consumer, edge networking, and industrial. In consumer, we're pleased that our XR platforms are powering over 50 commercial devices and gaining scale with the leading VR and AR ecosystems. Our early investments have established Snapdragon XR as a device platform of choice for connecting physical and digital spaces. Recent market developments position us as one of the key enablers of the Metaverse opportunity. Additionally, the ongoing convergence of mobile and compute continues to drive demand for Snapdragon-powered premium tablets, two-in-ones, and laptops. We are pleased with the strong market validation of ARM-based personal computing in the industry transition to a new SoC architecture. We're more confident than ever in the connected computing opportunity, our upcoming solutions powered by our NUVIA CPUs, and our collaboration with Microsoft. We're also seeing increased traction in consumer electronics. Our advanced technologies are powering category-leading devices, such as the Peloton Bike Plus and Tread, as well as the Astral, Amazon's recently announced household robot. In Edge networking, we are a leader in current and next-generation high-performance Wi-Fi 6 and Wi-Fi 6E access point solutions. We continue to see high demand for our products driven by home and enterprise upgrade cycles. We expect this trend to continue as productivity increasingly requires video collaboration, as well as cloud processing and storage. 5G, as wireless fiber, is now a reality and is gaining scale in the United States. Verizon recently announced 5G home Internet service availability in 57 markets, including more than 2 million households covered on millimeter wave. In addition, T-Mobile is leveraging their 5G network to target 7 million to 8 million home broadband customers over the next 5 years. We're seeing demand increase globally, making 5G wireless fiber one of the fastest-growing last mile broadband technologies. In industrial, we have expanded our Qualcomm IoT services suites to more than 30 verticals. For example, in retail, our solutions are powering digital signage, payment, and self-checkout devices from companies like Square and Clover, as well as solutions from Honeywell, Panasonic, Zebra, and others to enable new customer experiences, help empower store associates, and improve operational efficiencies. We also continue to lead the way on product innovation, with new launches like the Qualcomm Flight RB5, the world's first 5G AI drone platform. In RF Front End, we expanded our product portfolio with our recently announced ultraBAW RF Filter Technology that supports frequencies from 2.7 gigahertz to 7.2 gigahertz. This is the new industry benchmark for performance in this range. ultraBAW Technology also supports Wi-Fi bands, including 5 gigahertz, the newly adopted 6 gigahertz band for Wi-Fi 6E and future Wi-Fi standards. This creates a new growth factor for RF Front End as we attach RF Solutions to Wi-Fi. Our RF Front End portfolio, combining ultraSAW and ultraBAW Technologies, is now best in class from 600 megahertz to 7 gigahertz. With the addition of millimeter wave, we are the only RF front-end provider with a comprehensive solution for all bands. As cellular expands beyond handsets, we're focused on extending our modem-to-antenna platform to automotive and IoT. In our automotive sector, we're creating a leading horizontal and open platform with our Snapdragon Digital Chassis, which includes our Telematics, digital cockpit, car-to-cloud service, ADAS, and autonomy solutions. Taking the same approach we used to make the smartphone the world's largest computing and developer platform, we're currently working with automakers and Tier 1s to create a joint roadmap to build multi-tier, multi-generation, scalable, and upgradable platforms for long-term sustainable business. The strength of our digital chassis strategy is reflected in both our results as well as a strong design pipeline, creating a platform for innovation in Auto. We are also very excited about Arriver. Upon closing, Snapdragon Ride ADAS Solutions will be complemented with Arriver's computer vision, drive policy, and driver-assistant assets, enhancing our ability to deliver on an open and competitive ADAS platform for automakers and Tier 1s at scale. In handsets, we're successfully executing on our strategy. Our premium-tier Snapdragon solutions continue to gain traction with OEMs. In fiscal Q4, devices announced or shipped with our Snapdragon premium-tier products increased by 21% year-over-year. Notably, all leading 5G Android smartphone OEMs, by volume, continued to power their flagship devices with Snapdragon. Snapdragon continues to be the preferred choice for premium and high-tier Android smartphones in all regions. As a result, we're benefiting from the changing OEM landscape and Android SAM expansion. Lastly, our licensing business achieved fiscal '21 revenues in excess of $6.3 billion. QTL remains the most successful licensing business in the industry, reflecting the strength of our innovation in cellular technology, the value of our extensive patent portfolio, and our execution in securing long-term agreements with key OEMs, as well as over 150 5G agreements to date. As we have noted throughout the year, we continue to see incredibly strong demand across all our technologies as the current environment accelerates the scale of connectivity and processing at the edge. We still expect material improvements to our supply by the end of the calendar year, and our second sourcing initiatives remain on track. Before I turn the call over to Akash, I would like to highlight that we recently announced a goal to achieve net-zero global emissions for scopes 1, 2, and 3 by 2040. We also look forward to enabling a more sustainable future with 5G through its impact on greenhouse gas emissions reduction, energy and water use optimization, green jobs creation, and more. I would now like to turn the call over to Akash.

Akash Palkhiwala, CFO

Thank you Cristiano, and good afternoon, everyone. We are pleased to announce record fourth fiscal quarter results with non-GAAP revenues of $9.3 billion and non-GAAP EPS of $2.55, reflecting year-over-year growth of 43% and 76% respectively. For QCT, this was another record quarter with revenues of $7.7 billion and an EBT margin of 32%, both above the high end of our guidance. QCT EBT of $2.5 billion grew by 143% versus the year-ago quarter on revenue growth of 56% and 12 points of EBT margin expansion. We also delivered record revenues in each of QCT's revenue streams, handsets, RF Front End, IoT, and automotive. Handset revenues of $4.7 billion increased 56% year-over-year on strong demand across all major OEMs. RF front-end revenues of $1.2 billion grew 45% year-over-year and included the benefit of fulfilling demand in advance of certain holiday launches. IoT revenues were up 66% year-over-year to $1.5 billion as digital transformation continues to drive higher demand across our diversified customer base. Automotive revenues of $270 million grew 44% year-over-year on the ramp of digital cockpit launches and continued strength in telematics. QTL revenues of $1.6 billion and EBT margins of 72% were in line with guidance. These results reflect slightly lower-than-expected units offset by favorable mix. Lastly, we delivered GAAP EPS of $2.45, $0.47 above the high end of our guidance, driven by record non-GAAP earnings and approximately $500 million of gains in our QSI investment portfolio. Now, I would like to highlight some key achievements in fiscal '21. We are exceeding all targets we set at our 2019 Analyst Day, which is a year earlier than forecasted. We delivered year-over-year revenue growth of 26% in QTL and 64% in QCT, and more than doubled non-GAAP EPS to $8.54. In QCT, we had greater than 50% year-over-year growth in each of our revenue streams. EBT margins expanded from 17% in fiscal '20 to 29% in fiscal '21. Within handsets, our Android revenues for our Snapdragon chipsets were approximately 40% higher than our primary competitor. With our focus on diversification, RF Front End, automotive, and IoT accounted for 38% of total QCT revenues. Lastly, we returned 74% of our free cash flow to stockholders, including $3 billion in dividends and $3.4 billion in stock repurchases. Turning to our guidance for handset units in the first fiscal quarter. For calendar 2021, we are narrowing the range for 5G handsets to 500 to 550 million units. We're now forecasting mid to high single-digit growth in global 3G, 4G, and 5G handsets relative to calendar 2020. For the first fiscal quarter, we are forecasting revenues of $10 to $10.8 billion and non-GAAP EPS of $2.90 to $3.10. In QCT, we expect revenues of $8.4 billion to $8.9 billion, with EBT margins of 32% to 34%. At the midpoint, this implies year-over-year revenue growth of 32% and EBT dollar growth of 49%. The sequential revenue growth is driven by handsets due to higher demand primarily for our Snapdragon chipsets in Android devices. Following the record performance in the fourth quarter, we expect non-handset revenues to remain in line sequentially. Consistent with our previous guidance, we expect QTL revenues of $1.6 billion to $1.8 billion, with EBT margins of 74% to 78%. This forecast assumes sequential unit growth in line with historical trends. Lastly, we anticipate non-GAAP combined R&D and SG&A expenses to decrease 2% to 3% sequentially. As a reminder, operating expenses are typically higher in the second fiscal quarter, as it includes calendar year resets for certain employee-related costs. Looking forward, fiscal '22 will be another exciting year for Qualcomm, with year-over-year EPS growth expected to exceed 20% driven by strength across all QCT revenue streams. In handsets, we are positioned to benefit from the $10 billion SAM expansion due to the changing OEM landscape. A portion of this benefit is reflected in our first-quarter guidance, and we also expect it to contribute to the rest of fiscal '22. Before I finish my prepared remarks, I would like to thank our employees for their leadership and contributions in making 2021 successful. Finally, we look forward to seeing you at our Investor Day on November 16, where we will provide additional detail about our growth strategy. Thank you, and I'll now turn the call back to Mauricio.

Mauricio Lopez-Hodoyan, Vice President of Investor Relations

Thank you, Akash. Operator, we're now ready for questions.

Operator, Operator

Thank you. To queue a question, press star then the number one. To withdraw your question, press star two. If you're using a speakerphone, please pick up your handset before pressing the numbers. Our first question comes from Chris Caso with Raymond James, please proceed with your question.

Chris Caso, Analyst

Yes. Thank you. Good evening. For my first question, perhaps you could help us out with what was different from your expectations heading into this quarter. I know that you were struggling with supply constraints like everyone else in the industry. Was the supply better than you expected? Was it the demand, was it a combination of both?

Akash Palkhiwala, CFO

Hi, Chris, this is Akash. It was really a combination of both. We had lots of strength in QCT really across all of our revenue streams with handsets, IoT, and RF Front End, those are the three areas that did really well relative to our expectations. We were able to work through the supply constraints to address the demand that came up. So it was really a combination of both.

Chris Caso, Analyst

Great. Could you elaborate on your earlier comments? You mentioned that EPS growth is expected to exceed 20% as you approach next year. Can you provide us with some details? I'm sure that's a target you're aiming for as you head into the Analyst Day.

Cristiano Amon, CEO

Yeah, absolutely. I mean, just to clarify, what we guided is non-GAAP EPS growth of greater than 20%. The key driver for that is really across all QCT revenue streams, so you're seeing the strength exiting the year, and that's the strength that's playing out both in our first-quarter guidance and also the full-year. The one thing I would highlight is within handsets, we're really in a strong position to benefit from the $10 billion SAM expansion we've previously discussed from the changing OEM landscape. And a portion of this benefit is reflected in our first quarter guidance, and that's also contemplated in the greater than 20% EPS growth we are suggesting.

Akash Palkhiwala, CFO

Given that, we expect handsets to grow faster than non-handsets in fiscal '22. But really across-the-board, we'll have very strong growth rates and we are well set up to do well in the year and beyond.

Operator, Operator

Thank you. Our next question is coming from the line of Matt Ramsay with Cowen, please proceed with your question.

Matt Ramsay, Analyst

Yes. Thank you very much. Good afternoon, guys. And congrats on the results. Cristiano, I wanted to dig a little bit with you into the guidance for the December quarter in QCT. I think you guys mentioned in the script that that was primarily going to be driven by your Android business and increased supply. So I just wanted to make sure that I got that right. Obviously, that's a seasonally strong quarter for Cupertino, but I just wanted to dig a little bit more into the dynamics that are driving the fourth-quarter and Android. Thank you.

Cristiano Amon, CEO

No, thanks, Matt, for the question. Look, I think what you're starting to see exactly the correlation is going a different direction. You're correct, it's a seasonally stronger quarter for our modem-only shipments, but the sequential revenue growth is primarily driven by Android handsets and demand for Snapdragon mobile platforms, both across premium and high tiers. And consistently, we see an incredible opportunity to grow faster than the market. Android is the primary growth driver in our handset business right now.

Matt Ramsay, Analyst

Very clear. Thank you. Akash is my follow-up; 33% QCT op margins in the December quarter. Obviously, there was a settlement with Apple and some things changed there, but that number I think was 13% two years ago. So I guess it's pretty remarkable progress. I wonder if you might talk a little bit more and maybe this is something for a couple of weeks from now at the Analyst Day, but the puts and takes and drivers of the QCT op margin going forward and where are we? Is this a seasonal peak or is this a new trend? Thank you.

Akash Palkhiwala, CFO

Matt, thanks for the question. Yeah, we're very pleased with the operating margin performance as well. So maybe I'll point to a couple of drivers, but really, we're planning to address this in a lot more detail in a couple of weeks. If you see our gross margin performance in the September quarter that we just reported, very strong gross margins. We are forecasting a similar range going into the December quarter. Year-over-year, if you look at the full-year, so abstract back from the seasonality, we went from 17% in fiscal '20 to 29% in fiscal '21. We feel very comfortable with that number, and in a couple of weeks, we'll talk about how the combination of revenue growth, gross margin percentage, and R&D leverage will take us going forward.

Operator, Operator

Thank you. Our next question comes from the line of Samik Chatterjee with JPMorgan. Please proceed with your question.

Samik Chatterjee, Analyst

Thank you. Hi, thanks for taking my question. Cristiano, Akash, both of you are sounding great with the strong adoption of your premium chipsets heading into the December quarter. I wanted to get more insight into the adoption of millimeter wave with the Android customers. I know there has been some conversation among investors or disappointment regarding the primary customer not rolling out millimeter wave more widely this year. I would like to understand what you're seeing in the pipeline concerning millimeter wave and how our Android customers are reacting to that. I have a follow-up.

Cristiano Amon, CEO

Hi Samik, thanks for asking the question. Our position on millimeter wave remains unchanged, and will remain unchanged. There are two key points I think answer your question. First, we continue to track exactly as we'd expected. We have millimeter wave in the United States, it is now commercially available in Japan across all carriers, DOCOMO, SoftBank, KTDI, even a new carrier, Rakuten. We continue to be optimistic about the opportunity of millimeter-wave becoming commercial over time in China; the first milestone is the millimeter-wave for the Winter Olympics early 2022.

Akash Palkhiwala, CFO

Japan is moving forward with millimeter wave. Nothing has changed with the carriers' plans to continue to build the technology. There are a number of commercial millimeter-wave smartphones in Japan that include the Galaxy Note, the GS21, Galaxy Fold, and Sony. From our perspective, just knowing what we understand about wireless and how the growth of data is progressing, millimeter wave is inevitable; it’s just a matter of time. Different markets will deploy at different speeds, but that’s how we maximize our spectrum. Our position on millimeter wave remains unchanged.

Samik Chatterjee, Analyst

Thank you. For my follow-up, if I can ask you right where you've got some investors asking about how to think about the opportunity with Arriver and how should we think about OEM customers that are looking for a full-stack solution versus OEMs that look for just the hardware piece of that stack and leveraging Qualcomm from that aspect. Can you provide any updates? I think you've updated us on the purchase price along with SSA partners, but what more details can you give us around the closing as well as the price for Qualcomm standalone for the Arriver assets?

Cristiano Amon, CEO

We're very excited about the Veoneer acquisition and Arriver Technology. As we said before, with the natural owners of that asset, we believe we're on track to get all the approvals and close on this transaction. More importantly, as we had a business preparation in place with Veoneer prior to the acquisition, that remains unchanged and allows us to continue to progress toward our ADAS platform. We're receiving incredibly positive feedback from the market regarding our ability to provide a truly open horizontal platform for ADAS, and I highly encourage you to be at our New York Analyst Day where we will provide a lot more details about what we're doing in ADAS and autonomy.

Operator, Operator

Thank you. Our next question is coming from the line of Stacy Rasgon with Bernstein Research. Please proceed with your question.

Stacy Rasgon, Analyst

Hi, guys. Thanks for taking my questions. For my first one, I was curious just given the current state of the handset market, what kind of handset growth you have embedded in your more than 20% EPS forecast for 2022? Are you looking for recovery, or is it all around content? How are we thinking about our unit growth in the market to drive that?

Akash Palkhiwala, CFO

Yes, Stacy, for the guidance that we provided, there are no heroic assumptions on market growth. We are assuming similar scale to this year. Within that, we feel comfortable that we have opportunities to grow.

Stacy Rasgon, Analyst

So it feels like mid to high single-digit?

Akash Palkhiwala, CFO

That's right.

Stacy Rasgon, Analyst

Thank you. For my follow-up, I know you've had supply issues; I know they're resolving by the end of the calendar year. Are you still under-shipping what you could ship if you had supply? And as that supply eases up, will that have any impact on how we might think about typical seasonality in the March quarter?

Akash Palkhiwala, CFO

Stacy, it's Akash. We do have constraints really across-the-board and we have to figure out how the demand would have played out if there was supply across the industry. But we feel pretty comfortable that the overall supply picture is playing out exactly as we had planned. We saw this coming early and we've been talking about it for the last couple of quarters. We've put in place plans for dual sourcing for certain parts. We've now announced three parts that are dual sourced, that are available. Capacity expansions with our suppliers were previously planned and will come in towards the end of the year. So that's definitely something we are very excited about. On your question about the second quarter, we're not guiding the quarter at this point, but it's a reasonable assumption to think that as we launch our new Android premium-tier chip in the first quarter of the calendar year, that will offset some of the decline you would see in the handset market naturally within QCT. We also expect non-handsets to grow from the first quarter to the second quarter.

Operator, Operator

Thank you. Our next question comes from the line of Tal Liani with Bank of America. Please proceed with your question.

Tal Liani, Analyst

Hi, guys, I have two questions, so I'll just ask them together. What are the trends in China, meaning the headset market is weakening, and we heard it throughout the quarter? On the other hand, there is Huawei's share loss and your share gains. I'm wondering if you can share with us the trends within China and your outlook for the market. The second question is not related, but it's the second question I'm getting from investors, which is, you always say that when Apple starts using their modems, the surface area Apple is big and there are other opportunities. Can you elaborate on what the other opportunities are? What are the scenarios under which you can manage the transition of Apple using their modems? Thanks.

Akash Palkhiwala, CFO

Tal, it's Akash. I'll take the first one, and Cristiano will address the second one. What we saw in the September quarter was weakness in units in China and emerging markets, but developed market volume remained very resilient. That's really the jumping off point for the December quarter. We are forecasting normal seasonality on top of what we saw in September. A portion of the weakness was driven by supply imbalances at certain OEMs, which did impact the demand to a certain extent; but that's one of the key factors we saw happening. Within the market, though, 5G continues to be very strong, so we are seeing two trends in China. First is the transition to 5G; there's variance month-to-month, but very, very strong in the high 70% range has already transitioned to 5G. We are raising the midpoint of the guidance for 5G to now 525 million units. Within that, we're also seeing higher tiers of devices; OPPO, Vivo, Xiaomi, Honor, all of our customers are moving up tier, and as they move up tier, that creates an incremental opportunity for us. So, pretty positive market trends for us.

Cristiano Amon, CEO

To address the second question, we are currently focused on our contract with Apple, which involves providing modems for their products. We are pleased with our relationship, but anything beyond this contract represents additional potential for our business. As I've mentioned, we possess a range of technologies, and Apple has many devices. If opportunities arise, we would be eager to collaborate and supply them; however, we prefer not to speculate at this time. Our model's assumptions are strictly based on our existing contract, and everything else is considered additional opportunity.

Operator, Operator

Thank you. Our next question is coming from the line of Ross Seymore with Deutsche Bank. Please proceed with your question.

Ross Seymore, Analyst

Hi, guys. Thanks for letting me ask a question. Congrats on the strong results and guide. Akash or Cristiano, just wanted to talk a little bit about the pairing of the handset in the RF side of things. I know you said that there was a little bit of a pull-in into your fiscal fourth quarter on the RF side of things. With the Android market share gains that you're talking about heading into the December quarter, why is the RF side not coming along for that ride? Is that pairing something that is just a transition period? As we look further out, are those going to be more linked together?

Akash Palkhiwala, CFO

Ross, it's Akash. It's exactly the right question that we expect those two to move together in concert. As I mentioned in my prepared remarks, we did see some pull-in from the December quarter to the September quarter within RF Front End. It was really where supply was available; our customers chose to take it sooner than receiving the chipset. If you normalize for it, the two would have moved together. We definitely see the growth in the Android opportunity as a tremendous growth factor for us within RF Front End as well.

Ross Seymore, Analyst

Thanks for that information.

Cristiano Amon, CEO

Just to be crystal clear, all of this growth opportunity that we've seen in Android, especially the premium high, is coming with RF. I want to make that statement clear.

Ross Seymore, Analyst

Okay. Thank you for that, Cristiano. I guess it's my follow-up. If I talk about QCT X handsets and X RF Front End; it sounds like, Akash, you said those would be relatively flat in December, but then you thought it would actually grow again in March. What's going on in those markets? And then I guess the higher-level question is given the supply constraints, there's a big debate going on in broad-based semis between the investors worried about increased selectivity from customers and changing behaviors. Are you seeing some digestion period here? Why is it slowing, and then why is it re-accelerating?

Akash Palkhiwala, CFO

Yeah. So as you saw, we're tremendously strong results both in auto and IoT, and record results in both in the fourth fiscal quarter. You're right; going into the first quarter, we are forecasting in line sequentially. One of the key factors is we are supply constrained, and we're making certain decisions given the strong handset market in that quarter to allocate supply a little differently based on profitability. However, when you think about the raw demand from the customer, it continues to be very strong. We are confident that when you look at the second fiscal quarter or look at fiscal '21 going into fiscal '22, both those businesses will grow in a very strong fashion.

Operator, Operator

Thank you. Our next question comes from the line of Joe Moore with Morgan Stanley. Please proceed with your question.

Joe Moore, Analyst

Great. Thank you. I wonder if you could just talk about the overall supply chain and smartphone dynamics. Are you seeing bottlenecks at some of your customers where they're unable to procure parts that aren't from Qualcomm that might lead to inventory buildup of Qualcomm parts? It seems like, overall, the handset sell-through numbers are a little weaker because of those constraints, but it doesn't seem like the supply chain has changed at all. Can you just describe that dynamic?

Akash Palkhiwala, CFO

Sure, Joe. We're definitely seeing some mismatch of parts in the short-term at some of our customers. But you should think of those as really timing issues. The other thing to keep in mind is that, Cristiano outlined earlier in the call, we're focusing really on the premium and high-tier units. When our customers have supply mismatch, they actually end up supplying the premium high-tier devices. So our chips and our devices are still being used, and it's not something that's a big factor for us in the short-term.

Operator, Operator

Thank you. Our next question comes from the line of Rod Hall with Goldman Sachs. Please proceed with your question.

Rod Hall, Analyst

Thank you for the question. I wanted to revisit the topic of supply versus demand in the first quarter. Someone mentioned earlier that they expected supply to meet demand. I wanted to confirm if that is a correct assumption or do you anticipate supply will continue to increase to match demand into the second quarter? I have a follow-up as well.

Cristiano Amon, CEO

Hi, Rod. This is Cristiano. If you recall, we mentioned in a previous earnings call that we took early action and implemented several measures, including multi-sourcing and capacity expansions. We expect to see significant improvements in our supply by the end of the calendar year. This expectation is reflected in our guidance for Q1 and our supply capabilities. While there are still areas where we could ship more if we had additional supply, we have observed considerable improvements, with at least three announced products from multi-sourcing having shipped. We have been successfully increasing our supply. We recognize that different companies may have varying outlooks. Looking at the first half of 2022, we are still experiencing some shortages, but we anticipate that supply and demand will start to align in the latter part of the year.

Rod Hall, Analyst

Just, I guess, my question was just aimed at the idea that, this seems like it could continue to be a little bit of a tailwind for you, as you move into the beginning of next year. My follow-up is regarding the Android opportunity. I wonder if you guys could comment on the content there versus the other big high-end handset maker you supply. We calculate a substantial increase in content, but I'm just curious, do you agree with that? If you sell a high-end Android phone in January, is that phone going to have materially more content for you than another type of phone might?

Cristiano Amon, CEO

Absolutely. Look, we are very pleased with the strength of our Snapdragon 800 Series. The Snapdragon 800 Series has become synonymous with premium Android flagship smartphones. There’s a lot more silicon content besides the RF Front End that's attached to the modem. There’s GPU, there’s CPU, there’s all the multimedia, and it’s a lot richer platform than just selling a modem. It represents multiple times in terms of revenue and earnings contribution, and when we look at the sum available to us, when we look at the consolidation of a Snapdragon 800 being the chipset for every flagship, it’s no surprise that we actually grow faster in the Android segments.

Operator, Operator

Thank you. Our final question is coming from the line of Harsh Kumar with Piper Sandler. Please proceed with your question.

Harsh Kumar, Analyst

Hey, guys. First of all, congratulations on tremendous execution and diversification. Had a question. Cristiano, you talked a lot about Android and how positive you are on that. I know you were supposed to get additional supply in the December quarter. You seem to be benefiting from units. Are you benefiting from units primarily, or are you also going back and taking share that you were expecting to take from your competitors?

Cristiano Amon, CEO

Look, there's plenty of opportunity with the changing landscape for growth between us and our competitors. I think it's important to highlight that Qualcomm has been concentrated into premium and high-tier. There's very high demand for premium and high Snapdragon mobile platforms, both the 700 and 800 series. It is a share gain of Snapdragon in Android premium, and we're very happy with the opportunity to capture the higher value share of the market.

Akash Palkhiwala, CFO

Then maybe it's hard to answer that I’ll just draw your attention to product announcements that we had a couple of weeks ago where we announced a whole new set of 5G products across tiers.

Harsh Kumar, Analyst

Great, guys. For my follow-up, I wanted to follow up on a question that was asked about the March quarter. You talked about some benefits coming from your premium chipset you'll be launching in the March timeframe, which is seasonally weak. Now, Apple for one, talked about leaving, I think it was $6 billion plus worth of revenues behind on the table. Do you think you might get a benefit from all the handset OEMs that are leaving revenue behind on the table along with your premium? Or do you think it's just again, your own chipsets that are getting the benefit from the launch of new chipsets?

Akash Palkhiwala, CFO

What I said about the March quarter was really you have a seasonal decline in the handset market, but given the launch of our new chipset, and really all the other chipset launches we've done over the last month, we feel like we will be in a very strong position to expand our units within the Android market. The second thing I said is non-handset growth; we expect non-handsets, all three to grow within the quarter as well.

Operator, Operator

Thank you. That concludes today's question-and-answer session. Mr. Amon, do you have anything further to add before adjourning the call?

Cristiano Amon, CEO

Thanks everyone for joining us on the call today. We are at the intersection of key trends; their accelerating Edge connectivity, efficient processing, and on-device artificial intelligence. This is driving demand for our industry-leading roadmap of relevant technologies, creating a significant opportunity for growth and continued diversification. In addition to driving the mobile industry to 5G, we will power the connected intelligent Edge. I look forward to outlining our strategy and vision for the future at Investor Day on November 16, and sharing our next-generation Snapdragon platforms at our Annual Tech Summit in December. I also want to take a moment to thank our employees for an incredible fiscal year. They are truly the best of QUALCOMM, and there is no better time to be part of this great company.

Operator, Operator

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.