Qualcomm suffered steep falls in both revenue and net profit in its fiscal first quarter 2016, reflecting weaker demand for chipsets from smartphone vendors.

Revenue tumbled 19 per cent to $5.8 billion in the quarter, while net income was down by 24 per cent to $1.5 billion.

The volume of chipset shipments fell by 10 per cent in Q1 to 242 million, although the company said on an investor call that the figure was near the high end of expectations. Revenue from chipsets, covered in the results by the equipment and services category, was down 22 per cent to $4.1 billion

The company talked up licensing revenue following better than expected 3G/4G reported device sales of $60.6 billion, up seven per cent year on year. This translated into licensing revenue for Qualcomm of $1.7 billion, down 10 per cent.

The revenue from licensing would have been higher if not for a dispute with leading handset vendor LG which resulted in Qualcomm deferring revenue of more than $100 million during the quarter.

“Although LG continues to report and pay, we’re not recognising revenue while the arbitration regarding the dispute proceeds,” said Derek Aberle, the company president, on the investor call. The Korean vendor’s claims are without merit, he claimed.

Deferring LG-based revenue depresses the implied royalty rate as its shipments are included in Qualcomm’s total report device sales without corresponding revenue. Assuming the dispute is resolved,  then the company plans to recognise the deferred revenue at that time.

Qualcomm also supplied guidance for Q2 fiscal 2016 with revenue of between $4.9 billion and $5.7 billion, a fall of up to 29 per cent from $6.9 billion in the same period in 2015.

Q2 chipset shipments are slated for the range of 175 million to 195 million, compared to a 2015 performance of 233 million, the company forecast. In terms of licensing, total reported devices sales of $65 billion to $73 billion in Q2 represents a decline from $75.8 billion in Q2 FY15.