Leading chipmaker Qualcomm has slashed its forecast and now expects a double-digit drop in global smartphone sales this year. Only Apple is increasing sales, which saves Qualcomm from even bigger problems.
The chip group Qualcomm expects an even stronger downturn in the smartphone market than previously expected. Especially for smartphones with technology for super-fast 5G data transmission, Qualcomm only assumes that 600 to 650 million devices will be sold instead of the previous forecast of up to 750 million. The company, which supplies the main processors of many Android smartphones as well as most 5G cellular modems, is a good barometer for business.
According to calculations by the analysis company Canalys, smartphone sales fell by nine percent in the last quarter. Apple was therefore the only major provider that was able to increase sales with its iPhones.
For calendar year 2022, Qualcomm is now forecasting smartphone sales to shrink in the low double-digit percentage range. So far, the company has been preparing for a drop in sales in the mid-single-digit percentage range. Qualcomm sees “a rapid decline in demand” and was therefore cautious when forecasting its own business. Investors dropped the stock by a good 7.5 percent in after-hours trading on Wednesday.
On the sidelines of the figures, Qualcomm provided a clear indication that Apple is making slower progress than planned in its plan to switch to 5G modems developed in-house in the iPhones. So far, Qualcomm has estimated that only around a fifth of the 2023 model year iPhones will be equipped with its wireless modems. Now it says it will be the clear majority of devices. Only by 2025 is it expected that hardly any modems will be delivered to Apple.
The financial service Bloomberg had previously reported that Apple was struggling with its own modems with problems such as excessive heat development. The chips that provide the connection to the mobile network are a key element of smartphones and play an important role in battery life, among other things. Apple is gradually replacing chips from other suppliers in its devices with its own developments that are more efficient and powerful. The iPhone group was involved in a bitter patent dispute with Qualcomm for years.
Qualcomm is now expecting sales of $9.2 billion to $10 billion for the first quarter of its fiscal year, which will end in December. In the prior-year quarter, revenues had reached $10.7 billion after a jump of 30 percent. The profit will suffer from the fact that some smartphone providers are now reducing their inventories instead of building new devices, it said.
In the past quarter, Qualcomm was able to maintain a fairly high rate of growth. Sales rose 22 percent year-on-year to approximately $11.4 billion. Profit was up three percent to $2.87 billion.
