Qualcomm Shares Grim Market Forecast As Smartphone Sales Fall Again

(Reuters) -Qualcomm Inc on Wednesday forecast third-quarter income and revenue beneath Wall Street estimates, citing worries the smartphone business would take longer to exhaust extra provide earlier than contemporary orders stream in.

Shares of the chip designer fell 4% in prolonged buying and selling after it stated its forecast additionally accounted for macroeconomic headwinds, weaker international gross sales of handsets and channel stock drawdown.

“As we navigate this challenging environment, we remain focused on the critical factors we can control to emerge stronger from this downturn,” Qualcomm CEO Cristiano Amon stated in an announcement. “Our top priority remains to execute our diversification strategy and invest in areas that drive long-term value.”

The firm stated a larger-than-normal decline in its chip income forecast from the prior quarter was primarily due “to the timing of purchases by a modem-only handset customer.”

Qualcomm didn’t title the client, however Kinngai Chan, analyst at Summit Redstone Partners, stated it was Apple. Apple is the most important purchaser of its standalone modem chips, as a substitute of Qualcomm’s principal flagship chip which features a modem and an software processor. Apple makes its personal software processor.

Qualcomm forecast chips income of $6.9 billion to $7.5 billion.

The smartphones market was one of many first hit by declining demand after excessive inflation curbed shopper spending on discretionary items like electronics, leading to distributors slashing new chip orders.

Smartphone demand has remained weak regardless of promotions and worth cuts. Global smartphone shipments fell 13% within the first quarter, in response to analysis agency Canalys.

Easing COVID-19 curbs in China has not considerably boosted demand, with sliding first-quarter gross sales for Apple and its Android rivals on the planet’s second largest economic system.

Pervasive financial weak point has additionally compelled machine makers to restrict chip orders. Rising competitors particularly from Taiwan’s MediaTek is a priority.

The firm forecast income of $8.1 billion to $8.9 billion within the third quarter. Analysts polled by Refinitiv anticipated income of $9.14 billion.

It estimated adjusted earnings per share of $1.70 to $1.90, in comparison with analysts’ expectations of $2.16.

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