Qualcomm trade show booth
A Qualcomm trade show booth. REUTERS/Aly Song

Chipmaker Qualcomm forecast Wednesday that revenue would come in $2 billion less than Wall Street analysts estimated for the current quarter due to a sharp drop in smartphone sales.

The San Diego-based wireless pioneer also said profits would be less than expected. Its shares sank 7% in after-hours trading

Decades-high inflation, the Ukraine war, COVID-19 lockdowns in China and fears of an economic slowdown have soured demand for personal electronics as consumers abandon discretionary spending on items such as mobile phones.

That in turn led to a 12% drop in smartphone unit shipments in the third quarter ended September, according to Counterpoint Research.

Qualcomm expects a low double-digit percentage decline in handset volumes this year, compared with its prior forecast of a mid-single-digit percentage drop.

Revenue from Qualcomm’s handsets business, which makes up more than half of total sales, rose 40% in the fourth quarter, while revenue from chips that enable WiFi and Bluetooth connections fell 20%.

The company forecast current-quarter revenue in the range of $9.2 billion to $10 billion, compared with analysts’ estimates of $12.02 billion, according to Refinitiv data.

It expects adjusted earnings per share to be between $2.25 and $2.45, compared with analysts’ expectations of $3.42.