The company also projected a lower-than-expected profit for
the quarter, and said it expected a low double-digit percentage decline in
handset volumes this year, compared with its prior forecast of a
mid-single-digit percentage drop.
Qualcomm's disappointing forecast comes shortly after both
Intel and AMD cut their earnings estimates, in a sign that the slump in demand
is plaguing the wider industry.
Chipmakers including Texas Instruments and Micron Technology
have also raised concerns about a sharp drop in demand from electronics
companies as consumers curb their discretionary spending due to decades-high
inflation, rising interest rates and fears of an economic slowdown.
A recovery in the smartphone market could be pushed to the
second half of 2023 from the first half, IDC analyst Nabila Popal said.
"Demand has dropped globally, but very much so in China
as well as in emerging markets. This is what's actually pulling (down) the
smartphone market the most," she said.
The easing of chip shortages and supply-chain bottlenecks in
recent quarters has led to excess inventory at smartphone makers, with Qualcomm
estimating about eight to 10 weeks worth of "elevated inventory" that
could take a couple of quarters to work through.
Qualcomm Chief Financial Officer Akash Palkhiwala said the
holiday-quarter could be the bottom in terms of inventory as manufacturers use
up their existing chips.
Revenue from Qualcomm's handsets business, which accounts
for more than half its total sales, rose 40 percent in the fourth quarter that
ended September. 25, although revenue from chips that enable Wi-Fi and
Bluetooth connections fell by a fifth.
It was not all doom and gloom for Qualcomm as it won more
business from Apple, which the chipmaker has been trying to rely less on, and
said the company would start to see benefits from its increased share of chips
Samsung uses in the March quarter.
Qualcomm said it was now expecting to have the vast majority
of 5G modem share for the 2023 iPhone launch, up from a previous assumption of
20 percent. It also said on a post-earnings call that it was assuming minimal
contribution from Apple in fiscal 2025.
"We believe Apple will drive some growth in the
December quarter...but the Android market is extremely weak and many new
premium-tier foldable models that were launched a few months ago did not sell
well at all," said Kinngai Chan, analyst at Summit Insights Group.
The company is also facing stiffer competition from
Taiwanese chipmaker MediaTek in the higher-end Android market, said Runar
Bjørhovde, research analyst at Canalys.
Qualcomm forecast current-quarter revenue between $9.2
billion and $10 billion, compared with analysts' estimates of $12.02 billion,
according to Refinitiv. It expects adjusted earnings per share of between $2.25
and $2.45, versus expectations of $3.42.
To cope with the tough macroeconomic environment, Qualcomm
Chief Executive Cristiano Amon told analysts the company had implemented a
hiring freeze and would make further cuts to operating expenses as needed. © Reuters
0 comments:
Post a Comment