Joining other chip makers, chipset-making giant Qualcomm has painted a gloomy picture of the expected sales outlook for smartphones in the wake of Covid-19-induced lockdowns in China and economic slowdown, the media has reported. Qualcomm has projected a lower-than-expected profit for the quarter and said it expected a low double-digit percentage decline in smartphone volumes this year, compared with its prior forecast of a mid-single-digit percentage drop, says a report by news agency Reuters.
The San Diego-headquartered chip maker cut its projection for 5G smartphone sales this year to 650 million from an earlier forecast of up to 700 million. Earlier in the year, Qualcomm forecast shipments of more than 750 million handsets.
The company’s Chief Executive Cristiano Amon said the company had implemented a hiring freeze, was planning spending reductions for certain products and could make further cuts to spending as needed. “We’re being very disciplined in managing operating expenses,” he was quoted as saying by The Wall Street Journal.
Meanwhile, Qualcomm also mentioned that it would supply a large portion of Apple’s upcoming lineup of 5G iPhones, purportedly the iPhone 15 series next year with “modem chipsets” that coordinate communications between phones and cell towers. Qualcomm had earlier said it would only supply about 20 per cent of those chips, the WSJ report added.
Qualcomm’s lower-than-expected forecast comes soon after chip makers Intel Corp and Advanced Micro Devices (AMD) cut their earnings estimates, thus, indicating that the slump in demand is wider.
Other chipset makers, including Micron Technology and Texas Instruments, have also expressed concerns about a sharp decline in demand from electronics companies as buyers cut their discretionary spending due to decades-high inflation, economic slowdown and rising interest rates, the Reuters report added.
Meanwhile, Apple was the only smartphone company in the top five brands to record positive growth and improve its market position even as the global smartphone market recorded its third consecutive decline this year, dropping nine per cent year-on-year. This is the worst third quarter (Q3) for the global smartphone market since 2014, said a recent report by market research firm Canalys.