Qualcomm sees dull third quarter on weak chip demand for smartphones

(Reuters) -Qualcomm Inc forecast third-quarter revenue and profit below Wall Street estimates on Wednesday on worries it will take longer for the smartphone industry to exhaust the excess supply before fresh orders start flowing in.

Shares of the chip designer fell 4% in extended trading after it said its forecast was also a fallout of macroeconomic headwinds, weaker global handset units and channel inventory drawdown.

The company said a larger-than-normal decline in its chip revenue forecast from the prior quarter was mainly due "to the timing of purchases by a modem-only handset customer".

It forecast revenue for the segment to be between $6.9 billion and $7.5 billion.

The smartphones market was one of the first to be hit by declining demand after high inflation curbed consumer spending on discretionary goods like electronics, resulting in vendors slashing new chip orders.

Smartphone demand has remained weak despite promotions and price cuts. Global smartphone shipments fell 13% in the first quarter, according to research firm Canalys.

Easing COVID-19 curbs in China have also not significantly boosted demand, with Apple and its Android rivals seeing sales slide in the first quarter in the world's second largest economy.

A pervasive economic weakness has also forced device makers to limit their chip order levels. Rising competition from rivals especially Taiwan's MediaTek is an added pain.

The company forecast revenue between $8.1 billion and $8.9 billion. Analysts polled by Refinitiv expected revenue of $9.14 billion.

It expects adjusted earnings per share to be between $1.70 and $1.90, compared to analysts expectations of $2.16.

(Reporting by Chavi Mehta in Bengaluru and Jane Lanhee Lee in Oakland, California; Editing by Arun Koyyur)
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