A Qualcomm booth at an exhibition in Guangzhou, capital of South China's Guangdong Province Photo: IC

Chipmaker Qualcomm on Wednesday reported fiscal first-quarter results that slightly missed expectations while forecasting a strong quarter ahead. Chinese analysts warned that the US technology giant may still heavily rely on China to achieve its performance goals in the coming year.

Sales in the fiscal first quarter (September 28-December 27, 2020) rose by 62 percent year-on-year to $8.24 billion. Net income more than doubled to $2.46 billion.

The performance slightly missed Wall Street's sales expectations of $8.27 billion, according to a report from the Wall Street Journal, citing analysts surveyed by FactSet.

Qualcomm shares dropped by 7 percent in after-hours trade following the report.

Looking forward, Qualcomm forecast fiscal second-quarter sales and profits above Wall Street expectations, driven by a wave of phone buyers around the world upgrading their devices for 5G network connectivity, said a Reuters report.

Chinese analysts said that although it fell short of expectations, Qualcomm's quarterly performance was already very "healthy," while warning that its performance in the coming months, especially the 5G smartphone chips it relies on, will largely hang on its big customers in China.

Since there are fewer buyers in the China market now that Huawei "is gone," buyers like other Chinese smartphone producers Xiaomi and Oppo have more say in deal discussions, which may lead to a decline in Qualcomm's profits, Ma Jihua, a veteran industry analyst, told the Global Times on Thursday.

Moreover, drawing lessons from Huawei's experience, Chinese buyers are among those who most strongly feel the urgency of diversifying their sources, and they will especially avoid being too dependent on a single US supplier, further threatening its sales, according to Ma.

On Wednesday, Qualcomm CEO Cristiano Amon opened an account and made his first post on China's Twitter-like Sina Weibo.

"In this new year, our collaborations in China will continue to ensure that 5G moves forward and becomes even more accessible, so everyone can experience the benefits of this incredible technology," Amon said, with a picture taken by Chinese smartphone maker Xiaomi, one of Qualcomm's major Chinese buyers.

Ma said Qualcomm also faced strong competitors like MediaTek in the 5G chip race.

MediaTek surpassed Qualcomm for the first time to become the world's largest smartphone chipset supplier in the third quarter of 2020. The Taiwan-based chipmaker held 31 percent of the market during the third quarter, said a Counterpoint report. 

The share of MediaTek's chips in Xiaomi has increased by more than three times since the same period last year. It was also able to leverage the gap created by the US ban on Huawei, according to the Counterpoint report. 

"In the long term, as the global chip supply chain has been disrupted by the US ban on Huawei, companies everywhere are seeking self-reliance, and US chipmakers may face a loss in sales and perhaps their industry dominance," Ma said.

The US Semiconductor Industry Association has warned that US trade restrictions on China would do lasting harm to companies that made Silicon Valley a byword for US innovation and help the country maintain a technological and military edge over global rivals, according to a Wall Street report in March last year.