Qualcomm: Smartphone market outlook deteriorates
Qualcomm slashed its forecast for smartphone shipments again and gave a bleaker-than-expected sales outlook, joining other chipmakers in the face of a sharp decline after a brief boom in the pandemic, The Wall Street Journal reported.
The cellphone chip designer adjusted its previous forecast to a low-single-digit percentage, suggesting that the handset market's downward trend is accelerating. Qualcomm said in its quarterly results on Wednesday that it expected sales of up to $10 billion for the quarter, well below Wall Street estimates of around $12 billion.
The San Diego-based company lowered its forecast for 5G phone sales this year to 650 million units from an earlier forecast of 700 million. Earlier this year, it forecast shipments of more than 750 million units.
Qualcomm CEO Cristiano Amon said the company has implemented a hiring freeze and is planning to cut spending on certain products and may make further cuts as needed.
"We are very cautious in managing our operating expenses," he said on a conference call with analysts.
The company also said Wednesday that it will supply some of Apple's new 5G iPhones next year with so-called modem chips to coordinate communications between phones and cell towers. Qualcomm earlier said it would supply only 20 percent of its chips, suggesting that Apple has not been as fast as expected to develop its own modem chips and replace Qualcomm.
While phones have been a drag on Qualcomm's business, the company's sales have continued to rise as it gains market share in chips for high-end 5G smartphones, while it is diversifying into other markets, including the automotive industry, These markets are more resilient.
Qualcomm said sales rose 22% in the most recent quarter to $11.4 billion, beating analysts' expectations in a FactSet poll. Net income rose 3% to $2.87 billion, missing expectations.
The company's shares fell more than 6% in aftermarket trading.
Excessive stockpiling by chip customers during the pandemic is a factor in chip companies' weak forecasts. Qualcomm said its largest customer was responding to the economic downturn by using existing inventories rather than new orders, citing lower-than-expected sales as the main reason.
The broader tech industry has been challenged by a deteriorating macroeconomic environment, including rising interest rates and inflation. Amazon, Microsoft and Google-parent Alphabet Inc. all offered bleak sales forecasts.
Qualcomm said its mobile phone revenue in the latest quarter was $6.57 billion, up 40% from last year; its Internet of Things business grew 24% to $1.9 billion in sales; and sales in the auto industry climbed 58%, even as the business grew in The company's overall revenue is still relatively small.
