Qualcomm estimates weak demand for mobile device chips

Reuters, January 27 – Qualcomm (QCOM.O) has lowered its earnings forecast for the current quarter, falling short of analyst expectations. This comes as the mobile device market shows signs of slowing down and demand for the company’s chips weakens. The chipmaker expects a decline in mobile device chip shipments by 16 to 25% compared to the same period last year. Its major clients include Apple (AAPL.O), which is also facing challenges in the market. In addition, Qualcomm anticipates a drop in shipments of third- and fourth-generation mobile communication devices (3G & 4G) by 4 to 14%, which could negatively impact its licensing revenue. Just a day before, Apple reported that it might see its first revenue decline in 13 years, along with the lowest iPhone shipment growth on record. This follows concerns over a weakening Chinese market. These trends suggest that the era of rapid growth in the high-tech industry may be coming to an end. Following the announcement, Qualcomm's shares fell by 3% after Wednesday’s market close. During a conference call, the company revised its outlook for high-end product shipments, citing that a major customer experienced slower-than-expected sell-through. Mobile device chip sales dropped 10% in the first quarter, dragging down equipment and service revenues by 21.6%. Licensing revenue also declined by 10.4%. **Weak Outlook** For the second quarter, Qualcomm now expects adjusted earnings per share (EPS) between $0.90 and $1.00, below the average analyst estimate of $1.01. Revenue is projected to range from $4.9 billion to $5.7 billion, significantly lower than the expected $5.68 billion. This revised forecast highlights growing concerns about the company’s performance amid a broader slowdown in the tech sector. Investors are closely watching how Qualcomm will navigate these challenges in the coming months.

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