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Not even the Galaxy S23 could prevent Qualcomm's chip sales from falling by 25%
- Qualcomm’s chip sales are being affected by the down smartphone market.
- The company’s chip sales have dropped by 25% year over year.
- Qualcomm is preparing for “workforce reductions.”
It has not been a great year for smartphones. Demand has been down across the board for almost every brand, except for Google. As a direct result, chip makers are also experiencing down sales during this turbulent time. Qualcomm, the maker of Snapdragon SoCs, is having a particularly rough time, according to its most recent earnings report.
On August 2, 2023, Qualcomm published its third-quarter earnings report. The Q3 report shows that handset chip sales have gone down by 25% year over year. The company also recorded a net income loss of 52% year over year. And to make things worse, the guidance for the next quarter came in lower than expected, which resulted in an 8% stock drop after the call, according to Ars Technica.
Outside of the low demand for smartphones, such a decline in sales is surprising to see. Especially, given that Samsung and Qualcomm signed a deal to put Qualcomm’s chips in all of its Galaxy S23 phones. You’d think sales would be up after making a deal like that.
The severity of the losses is such that Qualcomm feels it’s compelled to take cost-cutting measures. Unfortunately, it looks like those cost-cutting measures will take the form of layoffs. As stated in the report:
Given the continued uncertainty in the macroeconomic and demand environment, we expect to take additional restructuring actions. While we are in the process of developing our plans, we currently expect these actions to consist largely of workforce reductions, and in connection with any such actions we would expect to incur significant additional restructuring charges, a substantial portion of which we expect to incur in the fourth quarter of fiscal 2023. We currently anticipate these additional actions to be substantially completed in the first half of fiscal 2024.
Qualcomm is expected to launch the Snapdragon 8 Gen 3 in late October. With the smartphone market not looking ready for a comeback anytime soon, things aren’t looking great at the moment for Qualcomm.