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Qualcomm suffers from smartphone decline

The slow demand for smartphones is having a negative impact on component manufacturers

Qualcomm suffers from smartphone decline
Qualcomm will release its premium mobile chip, the Snapdragon 820, in hope it will boost margins

The slow sales growth in smartphones has had a knock-on effect on component suppliers, with Qualcomm reporting in its latest quarter that earnings fell by 24%.

Only this week, Apple revealed its first quarter financial earnings and despite skyrocketing predictions, when dissected, all-in-all iPhone sales had only increased by 0.4%. In fact, Apple failed to meet it iPhone and iPad sales estimates.

The San Diego-based chip manufacturer, whose chips are used in smartphones, smart TVs, cars and gadgets, revealed chip shipments for the quarter are down by 10% in comparison to the same quarter last year, with 242m units shipped.

Furthermore, for the second quarter forecasts report Qualcomm is expecting worse results than what analysts were predicting. Qualcomm's expects revenue between $4.9bn and $5.7bn, whereas analysts project revenue of $5.68bn.

Despite the downward spiral, Qualcomm foresees stronger results in the second half of the year, when it debuts its premium mobile chip, the Snapdragon 820.

Qualcomm's chief executive Steve Mollenkopf said: "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 the fiscal year that ends in September."

For now, however, 2016 may be bleak for Qualcomm if sales on smartphones do not increase.

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