Dixon, Kaynes Tech shares fall over 4% after Qualcomm results, guidance disappoints

Shares of EMS companies, Dixon Technologies Ltd., and Kaynes Technologies Ltd. fell as much as 4% on Thursday, February 5, after disappointing results and guidance from Smartphone processor manufacturer Qualcomm Inc. overnight.

While shares of both companies are looking to recover from the lows of the day, they still are trading with losses of over 3%.

Qualcomm said in its earnings call that while there is demand for high-end phones, some of its customers, particularly in China, are planning on making fewer handsets, as they are not able to procure enough memory chips and that prices are constantly on the rise.

The shortfall in memory chips and the resultant rise in prices is something that has been highlighted by multiple brokerages, who had downgraded or cut price targets on Dixon Technologies in January.

“While our near-term handsets outlook is impacted by industry-wide memory supply constraints, we are encouraged by end-consumer demand for premium and high-tier smartphones,” Qualcomm CEO Cristiano Amon said in the statement.

Qualcomm's results and guidance were also below what the street had anticipated, leading to a 9% drop in its stock price during extended trading on Wednesday.

In an interaction with CNBC-TV18 on Monday, Saurabh Gupta of Dixon Technologies highlighted that while it is unclear whether the Production-Linked Incentive Scheme for Mobiles will be extended, the company is investing in backward integration for cell modules and that financial year 2026-2027 will be a year of stabilization. The company is also confident of the Vivo approval coming and growth returning to other brands as well.

Shares of Dixon Tech are down 2.8% on Thursday, snapping a three-day winning streak, while those of Kaynes are down to the lows of the day, currently trading 4% lower ahead of its December quarter results at ₹3,634.