Qualcomm Net Profit Plunges 42%... "Weak Performance Expected to Continue in Q2" (Comprehensive)

Qualcomm, a semiconductor chip design and supply company for smartphones, reported weak results for the first quarter of this year. The sluggish smartphone market dealt a direct blow. As the market is expected to continue its sluggish trend in the second quarter, the stock price is plummeting in after-hours trading.

On the 3rd (local time), Qualcomm announced its first-quarter results for fiscal year 2023 Q2, reporting a net profit of $1.704 billion. This represents a 42% sharp decline compared to $2.934 billion in the same period last year. Revenue for the same period was $9.275 billion, down 17% from $11.164 billion in the previous year.

The sluggish smartphone market dragged down Qualcomm's performance. Revenue from Qualcomm's main business unit, the mobile phone chip division, fell 17% to $6.11 billion during this period. According to research firm Canalys, global smartphone shipments in Q1 this year decreased by 13% compared to the same period last year.

Christiano Amon, Qualcomm's CEO, stated in a press release, "We will focus more on the factors we can control during this market downturn," adding, "We will continue to diversify and invest in businesses such as automotive, networking, and wearable devices with a long-term perspective."

[Image source=Reuters Yonhap News]

Qualcomm expects that it will take longer than anticipated to clear the excess supply in the smartphone market, forecasting that second-quarter revenue and profits will also fall short of Wall Street estimates.

Qualcomm's revenue guidance for Q2 this year is between $8.1 billion and $8.9 billion, significantly below Wall Street's consensus estimate of $9.14 billion compiled by financial information provider Refinitiv. The company also expects earnings per share to be between $1.70 and $1.90, lower than the Wall Street estimate of $2.16.

Weak demand and oversupply are casting a shadow over the semiconductor industry's overall performance. Intel, a U.S. semiconductor company that reported earnings on the 27th of last month, posted a net loss of $2.76 billion (approximately 3.7 trillion KRW) for Q1 this year, marking the largest loss in Intel's history.

Revenue remained at its lowest level in 13 years. Sales plummeted due to reduced demand for its core business of personal computer (PC) chips and inventory buildup. AMD, which focuses on PC semiconductors, also announced a net loss of $139 million (186.5 billion KRW) the day before.

The Wall Street Journal (WSJ) reported that sales of smartphones and PCs, which surged briefly during the COVID-19 pandemic due to the rise of remote work and non-face-to-face culture, are deteriorating as we enter the endemic era.

Meanwhile, Qualcomm's stock, listed on the U.S. Nasdaq market, was down 6.67% in after-hours trading as of 5:27 PM local time on the day due to disappointment over the earnings. Qualcomm's stock price has risen only 2% this year, underperforming the Nasdaq index, which rose 14.89% during the same period.

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