Qualcomm Warns of Lower Handset Demand Tied to COVID in China, Economy

Qualcomm executives warned of weakening 5G and other handset demand, in a call to announce Q4 results Wednesday. “As we look to fiscal '23, further deterioration of the macroeconomic environment and extended China COVID restrictions have resulted in demand weakness and temporary elevated channel inventory across the industry,” CEO Cristiano Amon said on a call with analysts. The company already implemented a hiring freeze, “and we have planned spending reductions across our mature product areas and [selling, general and administrative expense] to fund our diversification,” he said: “We are continuing to evaluate additional actions, and we are prepared and committed to making further reductions to operating expenses as needed.” Qualcomm started to have “a deceleration in demand for mass-tier handsets in consumer IoT” last quarter, said Chief Financial Officer Akash Palkhiwala. Qualcomm now projects 3G, 4G and 5G handset volume to decline in 2022 “by low double digits on a year-over-year basis, including 600 million to 650 million 5G handsets,” he said. Revenue Q4 was $11.4 billion, up 22% over last year, net income was $2.9 billion, up 3%. Qualcomm closed down 7.66% at $103.88 Thursday.