Qualcomm Revenues Fell 23 Percent in Q2 as Smartphone Slump Continues

Mobile microprocessor giant Qualcomm disappointed investors with its latest quarterly results and a downbeat assessment for the future. The firm posted a net income of $1.8 billion on revenues of $8.5 billion in the quarter ending June 30; those figures represent declines of 52 percent and 26 percent, respectively, year-over-year (YOY).

“We are pleased with our technology leadership, product roadmap, and design-win execution, which position us well for growth and diversification in the long term,” Qualcomm president and CEO Cristiano Amon said. “As AI use cases proliferate to the edge, on-device AI has the potential to drive an inflection point across all our products. Qualcomm remains best positioned to lead this transition given the unmatched accelerated computing performance with the power efficiency of our platforms.”

Qualcomm’s problems are mostly due to ongoing declines in smartphone sales: revenues from handsets amounted to $5.3 billion, a decline of 25 percent YOY. Qualcomm’s IoT business delivered another $1.5 billion in revenues (down 24 percent YOY), while Automotive revenues were $434 million (up 13 percent). The problem is that Qualcomm sees no end to the smartphone sales slump.

“We continue to estimate that calendar 2023 handset units [sold] will be down at least a high-single-digit percentage related to calendar 2022,” the firm said in a financial statement. “This forecast contemplates growth in handset units going into the holiday season … [but] we continue to operate under the assumption that inventory drawdown dynamics will be a factor throughout the end of the calendar year.”

Qualcomm separately admitted that it would likely be cutting jobs.

“Given the continued uncertainty in the macroeconomic and demand environment, we expect to take additional restructuring actions to enable continued investments in key growth and diversification opportunities,” Qualcomm wrote in its 10-Q filing with the U.S. Securities and Exchange Commission (SEC). “While we are in the process of developing our plans, we currently expect these actions to consist largely of workforce reductions, and in connection with any such actions we would expect to incur significant additional restructuring charges, a substantial portion of which we expect to incur in the fourth quarter of fiscal 2023. We currently anticipate these additional actions to be substantially completed in the first half of fiscal 2024.”