Qualcomm Revenue Forecast Falls Short as Smartphone Sales Slump

For the debut of the iPhone in 2023, Qualcomm stated that it currently anticipates holding the largest share of the 5G modem market. As the chipmaker suffers from a sales decline to smartphone users, Qualcomm’s forecast of holiday-quarter revenue fell almost $2 billion (approximately Rs. 17,000 crores) short of Street estimates, sending its shares down 7 percent after trading.

In addition, the company forecast a lower-than-anticipated profit for the quarter and stated it expected a lower-than-anticipated drop in handset sales this year, as compared to its earlier prediction of a mid-single-digit percentage decline.

Qualcomm‘s poor outlook comes soon after those Intel and AMD lowered their earnings projections, indicating that the sector decline in demand is a problem.

Concerns about a substantial decrease in demand from electronics companies have also been expressed by chipmakers Texas Instruments and Micron Technology as consumers cut it down on discretionary spending as a result of decades-high inflation, rising interest rates, and worries about an economic recession.

According to IDC researcher Nabila Popal, recovery within the smartphone industry could be delayed until the second half of 2023 rather than the first.

“What’s actually pushing (down) the smartphone industry (as) demand, that has decreased internationally, but most so in China as well as emerging markets,” she said. Qualcomm estimates that it has about eight to ten weeks’ worth of “elevated inventory” that might take many quarters to use up due to the recent easing in chip shortages or supply-chain bottlenecks.

As manufacturers utilize their existing chips, Qualcomm Qualcomm’s chief financial officer Akash Palkhiwala predicted that the Christmas quarter could mark the lowest inventory level.

When revenue for chips to enable Wi-Fi or Bluetooth connections decreased by a fifth, Qualcomm’s mobile division, which makes up more than half of its overall sales, had a 40% increase in revenue within the fourth quarter that concluded on September 25.

As such, Qualcomm did manage to expand its business with Apple, on which it has been attempting to cut back, and predicted that in the March quarter, it would start to reap the benefits of its increasing share of the processors that Samsung uses.

From such a previous prediction of 20%, Qualcomm stated it was now anticipating having the vast majority of a 5G modem market share for the release of the iPhone in 2023. In a post-earnings discussion, it also stated that it expected Apple to contribute little in fiscal 2025.

According to Kinngai Chan, an analyst at Summit Insights Group, “We think Apple can drive some growth within December quarter…but its Android market is quite sluggish and so many new premium-tier foldable models which were announced a few months ago did not sell well at all.

According to Runar Bjrhovde, a research analyst at Canalys, the company is also up against the more fierce competition with Taiwanese chipmaker MediaTek within the more expensive Android market.

According to Refinitiv, Qualcomm predicted current-quarter revenue of $9.2 billion and $10 billion, around Rs. 76,200 crore and Rs. 83,300 crores, correspondingly. It compared to analysts’ projections of $12.02 billion, or roughly Rs. 99,600 crores. In contrast to expectations of $3.42, it anticipates adjusted per-share earnings from between $2.25 and $2.45 (pp. 180 and 200). (roughly Rs. 280).

Cristiano Amon, the chief executive at Qualcomm, told analysts that the business had frozen hiring and would make additional operating expense reductions as needed to deal with the challenging macroeconomic.