Qualcomm outlook grim as smartphone sales stay weak
- While Qualcomm hopes smartphone sales will recover in China in the second half, CEO Cristiano Amon said ‘we have not seen evidence of meaningful recovery’
- Global smartphone shipments fell 13 per cent in the first quarter, according to research firm Canalys
Qualcomm Inc on Wednesday forecast third-quarter revenue and profit below Wall Street estimates, saying the smartphone industry would take longer to use up excess chips before fresh orders flow in.
Shares of the chip designer fell nearly 7 per cent in extended trading after it said its forecast also accounted for macroeconomic headwinds and weaker global sales of handsets.
While Qualcomm hopes smartphone sales will recover in China in the second half of the year, CEO Cristiano Amon told investors on a conference call that “we have not seen evidence of meaningful recovery and are not incorporating improvements into our planning assumptions”.
The company said a larger-than-normal decline in its chip revenue forecast from the prior quarter was mainly due “to the timing of purchases by a modem-only handset customer”.
Qualcomm did not name the customer, but Kinngai Chan, analyst at Summit Insights Group, said it was Apple, which makes its own application processor.
Apple is the largest purchaser of Qualcomm’s stand-alone modem chips, instead of its main flagship chip which includes a modem and an application processor.