Qualcomm also succumbs to smartphone slowdown, Q1 profits fall to $1.5bn

28 Jan 2016

The smartphone slowdown has hit Qualcomm with profits down 41pc to $1.5bn in its fiscal first quarter

Qualcomm, the maker of the Snapdragon processor found in most smartphones, has felt the cold winds of the smartphone market slowdown with revenues down 19pc year-on-year to $5.8bn and profits down 41pc to $1.5bn.

The prevailing headwinds point to a gloomy 2016 for the smartphone market, which needs to demonstrate more innovation to encourage consumers to buy new phones.

Qualcomm’s fiscal first quarter shows clearly that the slowing smartphone market is weighing on semiconductor orders.

Apple this week reported that iPhone sales have slowed to 1pc year-over-year, while Samsung has just reported that profits have plunged 40pc because of the slowdown in smartphone sales.

The chips are down for Qualcomm

Qualcomm revealed it shipped fewer MSM chips with 242m shipped in fiscal Q1 compared with 270m in 2015, a 10pc drop.

Looking ahead to the fiscal second quarter, Qualcomm is predicting revenues of between $4.9bn and $5.7bn down between 17pc and 29pc from the $6.9bn it reported in Q2 2015.

CEO Steven Mollenkopf said he expects the smartphone business to pick up later in 2016.

“We delivered a stronger than expected quarter, with earnings per share above the high end of our initial estimates, driven by better than expected 3G/4G reported device sales and benefits realised from cost actions across the company,” Mollenkopf said.

“We signed several new licence agreements in China and are on track with our cost reduction initiatives. Design traction for our new Snapdragon 820 processor continues to be strong, and we expect improving trends in our chipset business in the second half of fiscal 2016.”

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years