Qualcomm predicts “broadening demand weakness” for phones

Qualcomm thinks the world won’t be buying very many Qualcomm phones in the first half of this year. On today’s Q1 2023 earnings call, the company says it sees “broadening demand weakness among handsets and IoT products” and expects its customers simply won’t bother shipping as many phones in its second and third fiscal quarters (through June 2023) because they don’t expect people to buy them.

Next quarter, Qualcomm actually doesn’t expect its phone sales to decline all that much; they’ll be down seasonally, of course, since more people tend to buy electronics during the holiday quarter than any other period, but the company thinks they’ll be flat year over year. The company thinks things “might normalize in the second half of the calendar year.”

Qualcomm doesn’t think other phone manufacturers will delay announcing or shipping their new phones, saying the OEMs still appear to be on track. There will simply be a “drawdown of channel inventory,” where companies produce and ship fewer of them so they don’t have to reduce prices and potentially take a loss. Other chipmakers like AMD are doing similar drawdowns since PCs also just had the largest-ever drop in demand. AMD, however, thinks its own PC slump might end after one more rough quarter.