Qualcomm posted a downcast earnings outlook after the chipmaker was hit by the decline in the handset market.
Semiconductor manufacturer Qualcomm reported a 12% decline in total revenues for the quarter that ended December 25, 2022, to $9.46 billion from $10.7 billion in the year-ago period as the chipmaker grapples with weak demand for smartphones.
The company reported a 34% decline in fiscal first-quarter net income of $2.24 billion, or $1.98 per share, compared with $3.4 billion, or $2.98 per share a year ago.
Qualcomm’s CDMA Technologies (QCT) segment, which includes smartphone chips, radio frequency front-end components, automotive chips and internet of things devices, generated $7.89 billion in sales for the quarter.
The company reported an 18% drop of $5.75 billion in the revenue generated by its handset business, compared to the 40% growth in its previous quarter. The company executives said that weaker-than-expected handset demand and inventory drawdown were major headwinds and forecast that inventory clearance would persist in the first half of 2023, impacting results.
“As the handset industry continues to experience reduced demand we are now expecting elevated channel inventory levels to persist at least to the first half of calendar 2023,” Cristiano Amon, Qualcomm’s CEO, said on a conference call with analysts. Demand is weakest in the middle and low tiers of the market, he said.
Meanwhile, auto sales jumped by 58% to $456 million, and Internet-of-Thing (IoT) sales rose 7% to $1.68 billion, the company said.
Headquartered in San Diego, California, and incorporated in Delaware, Qualcomm designs and manufactures semiconductors, software, and services related to wireless technology. It owns patents critical to the 5G, 4G, CDMA2000, TD-SCDMA and WCDMA mobile communications standards.