ARM Holdings Plc., a semiconductor designer owned by SoftBank, is set to release its December quarter earnings on Wednesday. The company is expected to report strong results and guidance, thanks to sustained demand for Android devices.
According to KeyBanc Capital Markets analyst John Vinh, ARM Holdings is benefiting from the strength in demand from Android phone makers. This is surprising considering that Samsung, the world’s largest Android phone maker, recently lost its top position to Apple after 13 years.
Vinh believes that the market is heading in the right direction, with improved holiday season demand and the launch of new flagship Android devices focusing on on-device artificial intelligence (AI) capabilities. Samsung’s Galaxy S24 series and OnePlus 12, both powered by Qualcomm’s Snapdragon 8 Gen 3 chipset, are examples of these AI-focused launches.
While ARM Holdings is expected to perform well, there are concerns about Apple’s iPhone sales guidance in the Chinese market. Huawei’s resurgence in China, particularly with the upcoming Mate 70 series smartphone, could pose a challenge for Apple. Huawei is expected to launch the Mate 70 series in September, just days after the expected launch of Apple’s iPhone 16.
Analysts, such as Martin Yang from Oppenheimer, believe that Apple’s revenue decline in China and its struggles against Huawei could drive concerns throughout 2024. Wedbush’s Dan Ives has also described Apple’s guidance for the March quarter as “very conservative” and noted that the company is struggling to compete with Huawei.
These challenges in China could keep Apple’s shares range-bound, according to analysts.
In conclusion, ARM Holdings is expected to report strong earnings and guidance thanks to sustained demand for Android devices. However, Apple’s struggles against Huawei in China could pose a potential risk for the company and its suppliers. It will be interesting to see how these dynamics play out in the coming months.
