Qualcomm slides on lower smartphone sales, and the outlook doesn't get any better

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What you need to know

Qualcomm released its FY Q1 financial earnings on February 2.
The company saw revenue declines across the company's various businesses and divisions.
The company expects revenue to continue falling in the current quarter, despite sales of the new Galaxy S23.

Qualcomm's latest financial earnings report underscores a challenging year for smartphone OEMs as demand falls. The company reported $9.46 billion over the quarter ending on December 31, 2022, which is not only a 12% decline compared to the same period in late 2021 but also falls below analyst expectations.

The company's QCT business is responsible for most of its revenue, representing sales of handsets, automotive, and IoT. The division overall saw an 11% drop in revenue, which was attributed to the 18% decline in handset revenue. Coincidentally, this coincides with IDC estimates that smartphone shipments fell in Q4 2022 by 18%.

"In a challenging environment, we delivered results consistent with guidance, including year-over-year growth in QCT Automotive and IoT," said Qualcomm CEO Cristiano Amon in a statement. "The long-term trends driving demand for our differentiated technologies and solutions that enable digital transformation are intact. We are confident in our ability to navigate the near term and remain focused on executing our diversification strategy."

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Unfortunately, Qualcomm's guidance for the current quarter (FY Q2 2023) doesn't paint a rosy picture either, with revenue estimated at somewhere between $8.7 billion and $9.5 billion, signaling a downward trend in smartphone sales. For comparison, Qualcomm raked in $11.16 billion during this same period last year.

.@Apple and @Qualcomm's earnings clearly demonstrate the smartphone slowdown last year was real and probably will continue into the first half of this year at the very least. The difference is that Qualcomm's biz is far more diverisified $AAPL $QCOMFebruary 2, 2023

Interestingly, this guidance comes after Samsung launched the new Galaxy S23 series, which is powered by the Snapdragon 8 Gen 2 globally. This is a big deal for an S-series flagship and should represent a win for both Qualcomm and Samsung.

Amon stated during the conference call that the company is implementing more spending reductions and that the handset industry "continues to experience reduced demand we are now expecting elevated channel inventory levels to persist at least to the first half of calendar '23." He further notes that the mid and lower smartphone tiers are more affected by this reduced demand. Qualcomm CFO Akash Palkhiwala follows by stating that this may go into Q3 2023, although inventories may normalize during the second half of the year.

Derrek is the managing editor of Android Central, helping to guide the site's editorial content and direction to reach and resonate with readers, old and new, who are just as passionate about tech as we are. He's been obsessed with mobile technology since he was 12, when he discovered the Nokia N90, and his love of flip phones and new form factors continues to this day. As a fitness enthusiast, he has always been curious about the intersection of tech and fitness. When he's not working, he's probably working out.