Qualcomm revises mobile chip sales on weaker retail outlook
Inflation, fear of recession and war in Ukraine dent consumer confidence
Smartphone chipmaker Qualcomm is in the eye of a potential economic storm as inflation and fears of a recession pressure consumers to reconsider spending priorities and hold off on that brand new handset.
The business last night trimmed its annual sales forecast and slashed smartphone shipment guidance despite reporting healthy double digit increases in turnover for most recent quarter.
Revenues for Qualcomm's fiscal Q3 of 2022 ended 26 June swelled by 36 percent to $10.94 billion, surpassing analyst projections. Yet the same could not be said of its Q4 sales forecast of between $11 billion and $11.8 billion, lower than consensus of $11.9 billion.
In an earning call to discuss the latest financial results, Cristiano Amon, CEO at the mobile chipmaker said that its forecast was "mindful of the challenging economic environment."
In the same online briefing, chief financial officer Akash Palkhiwala predicted smartphone shipments would drop by roughly 5 percent year-on-year in 2022, dropping from prior estimates of 750 million units to between 650 million two 700 million devices.
"We expect the elevated uncertainty in the global economy and the impact of COVID measures in China will cause customers to act with caution in managing their purchases in the second half of calendar '22," he said.
"Economic headwinds, sluggish demand and inventory pile-up have resulted in vendors rapidly reassessing their portfolio strategies for the rest of 2022," said Runar Bjørhovde, Canalys researcher.
IDC said at the start of last month it expects shipments of phones to shrink 3.5 percent this year versus last. Weakening demand, inflation, and the war in Ukraine all featured in its thinking.
As for its most recent full quarter, Qualcomm said handset chips grew 59 percent to $6.149 billion, RF front-end was up 9 percent to $1.04 billion, Automotive chips grew 38 percent to $350 million and IoT was up 31 percent to $1.83 billion on the back of a strong showing in edge networking and industrial IP.
Qualcomm reported net income of $3.73 billion, up from $2.02 billion.
High-end consumer hardware maker Apple reports its latest full quarterly figures tonight, and analysts will be looking to see what progress was made, if any. Apple did warn some months back that the Shanghai lockdown would harm sales by up to $8 billion.
Other tech giants reporting this week include Microsoft and Google parent Alphabet, and judging by their output, business technology demand is holding up. As for consumers, that's another matter altogether. ®