Qualcomm forecasts earnings below expectations as smartphone demand worsens

(Reuters) - Qualcomm Inc forecast second-quarter revenue and profit below Wall Street estimates on Thursday, as the company grapples with weak demand for smartphones and a supply glut.

Smartphone shipments dropped 18.3% in the quarter ended Dec. 31 marking the largest ever quarterly slump, according to data from research firm IDC, as even the holiday shopping season could not revive battered consumer spending amid rising prices. Shipments hit a nine-year low at 1.21 billion units in 2022, IDC added.

The weakness in demand for lower-end phones has also begun to hit premium devices, which fetch companies like Qualcomm higher prices for their chips.

A supply glut in the smartphone market, which was the one of the first to show softening in demand following soaring pandemic-led growth, is an added blow.

Smartphone chip firms including Apple supplier Qorvo forecast downbeat earnings as its customers continued to clear bloated inventory. Analysts at Cowen expect smartphone shipments will fall 4% this year as recovery in China demand will take some time following a big COVID-19 outbreak.

Revenue from its handset business, which makes up the largest chunk of total sales, fell 18%, compared to a 40% growth in the previous quarter.

The chipmaker expects revenue in the current quarter to be in the range of $8.7 billion to $9.5 billion, compared with analysts' estimates of $9.55 billion, according to Refinitiv data.

It expects adjusted earnings per share to be between $2.05 and $2.25, compared to analysts expectations of $2.26 per share.

(Reporting by Chavi Mehta in Bengaluru and Jane Lanhee Lee in Oakland; Editing by Shailesh Kuber)
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