Aug 01, 2022 
Qualcomm Inc., the biggest maker of chips that run smartphones, gave a lackluster forecast for the current period, saying that a weakening economy will hurt consumer spending on mobile devices.
Revenue will be $11 billion to $11.8 billion in the fiscal fourth quarter, Qualcomm said in a statement Wednesday. That compares with an average analyst estimate of $11.9 billion. Excluding certain items, earnings will be $3 to $3.30 a share, versus the $3.26 average projection.
Qualcomm shares, which have outperformed a general slump in chip stocks this year, slipped about 2.4% in extended trading following the announcement.
Rising inflation has eaten into consumer spending power and hurt sales of smartphones, the key market for Qualcomm’s chips. While Chief Executive Officer Cristiano Amon is pushing into different areas -- including vehicles, networking gear and computers -- the company still relies on phones to fuel growth.
Qualcomm now expects smartphone shipments to decline in the mid-single-digit percentage range in 2022 from the prior year -- a dimmer outlook than it had previously. The chipmaker’s customers are cutting back on purchases of components for midrange and lower-end Android phones as they try to work through excess inventory.
While demand for premium phones is still relatively robust, there will be fewer 5G phones sold than Qualcomm had projected.
“The market is likely to be smaller than we originally forecast,” Amon said. “The weakness we saw was in the mid to low tiers.”
The company is unusual in the chip industry because a large chunk of its profit comes from licensing. Makers of phones pay to use Qualcomm’s technology, regardless of whether they buy its chips, because the company owns patents that cover some of the fundamentals of mobile communications.
