Qorvo earnings expose risks in global smartphone market

Qorvo’s (NASDAQ:QRVO) latest earnings revealed several risks it was facing in the smartphone market, which accounts for more than half of the company’s revenue.

Qorvo shares tumbled more than 20% by early market trading Wednesday. The tumble was due to shifts in the global smartphone market, which prompted Qorvo to lower its revenue and earnings per share outlook for the second half of fiscal 2025.

“Qorvo reported better results but weaker guidance, driven by a shift from 5G Android mid-tier handsets toward entry-level models,” said Susquehanna analyst Christopher Rolland, in an investor note.

“While many were expecting content at Apple (NASDAQ:AAPL) to increase this year, it now appears to be declining modestly as management primarily blamed unfavorable mix,” Rolland added.

Apple accounted for nearly half of Qorvo’s revenue during fiscal 2024, while Samsung (OTCPK:SSNLF) made up 12%.

Qorvo said it is reducing its exposure to the China smartphone market.

“China-based Android is under $100M and expected to trend lower over the course of fiscal ’26,” said Qorvo Chief Financial Officer Grant Brown, during the company’s earnings call. “Our exposure to that has grown smaller. It is — if you look at our China-based Android revenue down over 75% from the peak and Android revenue in general is down 50% from the peak.”

Susquehanna reduced its price target on Qorvo to $90 from $115 and maintained its Neutral rating.

Meanwhile, BofA reduced its price target to $80 from $115 and reiterated its Underperform rating.

“Qorvo grapples with company-specific execution issues within its core mobile-based ACG (Advanced Cellular Group) segment (72% of sales) inside an already challenged end-market where secular growth opportunities look slim,” said BofA analyst Vivek Arya, in an investor note on Wednesday.

Benchmark lowered its rating on Qorvo to Hold from Buy following Tuesday’s financial report.

“With the company not singling out Apple, its largest customer, likely at nearly 50% of revenue, but also pointing to lesser dollar content, in Samsung’s current generation of flagship phones, where Qorvo’s revenue in the OEM’s highest volume fall models is less than it was last year,” Benchmark noted. “This lesser Qorvo dollar content is also being seen at Apple’s iPhone 16 tear-downs, with the company having a smaller leverage to Apple’s non-Pro models, which appear to be seeing a higher mix percentage than originally expected.”

Raymond James also downgraded the stock to Market Perform from Outperform.

“Product mix at Apple is impacting the company’s content, and as such, management now expects Apple revenue to decline in low single digits in FY25,” said Raymond James analyst Srini Pajjuri.

However, Raymond James did point out that Qorvo’s non-smartphone business is performing well. This includes its automotive, defense and aerospace, and connectivity and sensors group segments.

Other companies with high exposure to the smartphone market were also down early Wednesday. Skyworks Solutions (NASDAQ:SWKS) slid 8%, and Qualcomm (NASDAQ:QCOM) was down 3%.