"Economic Downturn Hits Smartphones: US Qualcomm Issues Earnings Forecast Below Expectations"

Sales Forecast for July-September Below Market Expectations Due to Economic Downturn and China Lockdowns
Gartner Predicts Sharp Slowdown in Smartphone Semiconductor Sales Growth This Year
Qualcomm Extends License Agreement with Samsung Electronics to Strengthen Cooperation

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Qualcomm, a U.S. semiconductor company and a major customer of Samsung Electronics and Apple, forecasted that its performance growth would somewhat slow down due to concerns over an economic recession and a decrease in smartphone sales.

According to Bloomberg and others on the 27th (local time), Qualcomm projected its revenue for the fourth quarter of fiscal year 2022 (July to September) to be between $11 billion and $11.8 billion (approximately KRW 14.4 trillion). This is below the market estimate of $11.9 billion. Earnings per share were expected to be between $3 and $3.30, falling short of the market estimate of $3.26.

Qualcomm is the world's number one mobile semiconductor fabless company (semiconductor design company) by revenue and the second largest by shipment volume, following Taiwan's MediaTek. Due to a decline in consumer demand caused by rising inflation, smartphone sales have significantly decreased, inevitably impacting Qualcomm's performance. The war in Ukraine and China's COVID-19 lockdown measures have also hit smartphone demand.

Qualcomm forecasted that smartphone shipments this year would decline by the mid-single digits compared to the previous year. While sales of relatively high-priced premium smartphones are expected to remain strong, sales of mid- to low-priced products are predicted to decrease somewhat. Cristiano Amon, Qualcomm's CEO, said, "The market appears to be shrinking more than we initially expected."

On the same day, market research firm Gartner predicted that the global semiconductor market would contract next year. After showing a high growth rate of over 20% last year, the semiconductor market's growth slowed to 7% this year and is expected to decline by about 2% in sales next year.

In particular, Gartner forecasted that PC shipments would decrease by 13.1% this year compared to last year, unlike the record highs in 2020 and 2021. Accordingly, semiconductor sales for PCs are expected to decline by a record 5.4% on an annual basis this year. Semiconductor sales for smartphones are projected to grow by 3.1% this year, significantly slowing from 24.5% growth last year.

Qualcomm's revenue for the third quarter of fiscal year 2022 (April to June) was $10.93 billion, a 37% increase compared to the same period last year, exceeding market expectations. Earnings per share were $2.96, up 53% year-over-year. Semiconductor sales for smartphones increased by 59% year-over-year to $6.1 billion, while sales for Internet of Things (IoT) and automotive semiconductors were $1.83 billion and $350 million, respectively.

Qualcomm stated that it would focus on supplying semiconductors for premium smartphones for the time being while concentrating on developing other semiconductors such as those for automobiles. Following the earnings announcement after market close, Qualcomm's stock price fell nearly 4%.

Meanwhile, Qualcomm announced that it had agreed to extend its patent license agreement with Samsung Electronics for 3G, 4G, 5G, and future 6G mobile technologies until 2030. Additionally, Qualcomm's subsidiary Qualcomm Technologies and Samsung Electronics will expand their cooperation and increase the use of the Snapdragon platform.

This content was produced with the assistance of AI translation services.