Qualcomm provided a gloomy outlook for the next quarter, warning of a slump in sales to smartphone customers due to an uncertain economic environment and reduced demand, although it did post a sizeable revenue rise in its fiscal Q4 2022 (ending 30 September).

In updated guidance, Qualcomm forecast 3G, 4G and 5G handset volumes would hit a low double-digit percentage decline, from a previously-expected mid single-digit drop in calendar year 2022.

Alongside the macroeconomic environment and “rapid deterioration in demand”, the chip company explained the easing of supply constraints across the semiconductor industry “have resulted in elevated channel inventory”.

In effect, Qualcomm said its customers were now “drawing down their inventory”. The company estimates about eight-to-ten weeks’ worth of build up which could take a few quarters to stabilise.

As a result, Qualcomm expects the next quarter could be the “bottom”, with regards to inventory, as manufacturers use up their existing chips.

Apple business
In fiscal Q4, the company posted a 22 per cent year-on-year rise in revenue to $11.3 billion, while net income rose 3 per cent to $2.9 billion.

Qualcomm president and CEO Cristiano Amon stated the uptick in earnings reflected growth across its chipset, IoT and automotive businesses.

He highlighted a multi-year agreement with Samsung to expand the use of Snapdragon in Galaxy products, with the US company also boosted by winning more business from Apple.

On an earnings call, CFO Akash Palkhiwala added Qualcomm expected to have the vast majority of share of 5G modems for the 2023 iPhone line-up, an increase on its previous assumption of 20 per cent.

“Beyond this, there are no changes to our planning assumption and we are assuming minimal contribution from Apple product revenues in fiscal 2025,” he added.