Qualcomm said its revenue dropped 12 percent to $9.46 billion for its fiscal first quarter ended December 25, 2022.
Revenue from Qualcomm’s handset business, which makes up the largest chunk of total annual sales, dropped 18 percent to $5.75 billion in the October-December quarter, compared to 40 percent growth in the previous quarter of the year.
“The handset industry continues to experience reduced demand, and we are now expecting elevated channel inventory levels to persist at least through the first half of calendar 2023,” Cristiano Amon, Qualcomm CEO told investors.
Qualcomm’s Automotive business revenue grew 58 percent to $456 million. Qualcomm’s revenue from IoT business increased 7 percent to $1.682 billion. Qualcomm’s Automotive and IoT business units are yet to become strong revenue generating units.
Qualcomm claims that IoT business is poised to become its largest addressable market – ahead of its smartphone business. Qualcomm is aiming for generating IoT revenue from three categories: Consumer, Edge Networking and Industrial.
The US-based chipmaker forecast current quarter revenue in the range of $8.7 billion to $9.5 billion. This indicates that the smartphone chipset leader is not expecting a revival in the market conditions.
The latest Gartner report said worldwide smartphone shipments will decline 4 percent in 2023 to 1.23 billion units in 2023 from 1.28 billion units in 2022.
“Consumers are holding onto their phones longer than expected, from six to 9 months, and moving away from fixed to flexible contracts in the absence of meaningful new technology,” said Ranjit Atwal, Senior Director Analyst at Gartner. “In addition, vendors are passing on inflationary component costs to users which is dampening demand further. End-user spending on mobile phones is projected to decline 3.8 percent in 2023.”
On Wednesday, Samsung Electronics launched its latest Galaxy S23 series smartphone which now uses 100 percent of Qualcomm processors globally.
“Discussions with mobile service providers revealed a deepening weakness in smartphone demand globally which doesn’t bode well for Qualcomm,” said Maribel Lopez, tech analyst at Lopez Research.
Apple said iPhone sales fell last quarter for the first time since 2020.
Qualcomm also said during the earnings call that it doesn’t expect its current licenses to export 4G, Wi-Fi and other chips to Chinese telecom giant Huawei to be impacted by reports that the U.S. Commerce Department has stopped granting export licenses to Huawei.
“Those licenses were issued because Congress reached the determination that they don’t affect national security issues. Those will continue for some number of years,” Alex Rogers, president of Qualcomm Technology Licensing and Global Affairs said on the call with investors.
Qualcomm executives said Snapdragon Satellite will provide global connectivity for messaging utilizing Iridium’s weather-resilient L-band spectrum and will initially be available on next-generation premium smartphones using Snapdragon 8 Gen 2 within the second half of 2023.