Chavi Mehta, Jane Lanhee Lee

(Reuters] -Qualcomm Inc expects third-quarter revenue to surpass analysts’ expectations. It beat profit and second-quarter revenue estimates by more than a quarter on Wednesday. This was mainly due to its decision to concentrate on a growing, non-handset company to mitigate a potential hit from slower smartphone demand.

After-hours trading saw Qualcomm shares rise by about 5% due to the strong earnings outlook for Qualcomm (NASDAQ) and record quarterly revenues.

Consumers have been unable to spend on smartphones due to the rising cost of phones, insecurity in China and war in Ukraine. According to Chief Executive Officer Cristiano Amon, Qualcomm was unaffected by the slowing of demand in the premium smartphone market where Qualcomm leads, but this did not affect Qualcomm.

Qualcomm is diversifying its revenue streams to reduce dependence on smartphones. Amon stated that it has succeeded in this strategy so far by catering to automotive markets.

Qualcomm has seen a rise in cloud-based and 5G applications. The company makes chips that allow devices to connect to both wireless networks and mobile data networks. Qualcomm’s flagship chipset, Snapdragon 2, was also released during the quarter.

The company’s revenue from chip sales to automobile and internet-powered devices rose by 41% and 61% respectively in the second quarter. However, its mainstay handset business saw a 56% increase, thanks to the launch of the Snapdragon.

Qualcomm, on the other hand, is trying to minimize the loss of business from Apple (NASDAQ) and taking advantage of China’s gap in smartphone markets by meeting the chip requirements of Chinese brands such as Oppo, Vivo, Xiaomi (OTC), particularly for top-end smartphones.

According to Refinitiv’s IBES data, the company expects current quarter revenue in the $10.5-$11.3 billion range, while analysts are expecting $9.98 billion.

Revenue adjusted for March 27, 2017, was $11.16 Billion, higher than the estimates of $10.6 Billion.

Qualcomm beat estimates by $2.91 per Share to earn $3.21 per share after excluding items