Qualcomm (QCOM) earnings report Q2 2023

Qualcomm reported second-quarter earnings on Wednesday that were in line with analyst expectations but saw sales from handset chips, a core business for the company, decline 17% on an annual basis.

Qualcomm shares fell over 2% in extended trading.

Here’s how the chipmaker did versus Refinitiv consensus estimates:

• EPS: $2.15 per share, adjusted, versus expectations of $2.15 per share
• Revenue: $9.27 billion, versus expectations of $9.1 billion

In the quarter ending in March, Qualcomm said net income fell 42% to $1.70 billion, or $1.52 per share, from $2.93 billion, or $2.57 per share, a year ago.

Qualcomm said it expected around $8.5 billion in sales in the current quarter, short of Wall Street expectations of $9.14 billion. Analysts were expecting current-quarter earnings guidance of $2.16 per share, but Qualcomm said it expected it that to be around $1.80.

Qualcomm CEO Cristiano Amon blamed a challenging environment in a statement, and the company said it had not seen evidence that smartphone sales are recovering in China. The smartphone market is looking at a tough 2023, with shipments for the global market declining over 14% in the first quarter, according to IDC.

Qualcomm’s chip segment, called QCT, sells smartphone processors, automotive chips, and other physical parts for advanced electronics. It declined 17% to $7.94 billion in revenue during the quarter.

The biggest part of QCT’s sales come from handset chips, which are the processors at the heart of most Android phones. Qualcomm reported $6.11 billion in handset sales, down 17% from last year.

Qualcomm’s automotive business, which includes chips and software for cars, is still small, although it showed 20% growth during the quarter to $447 million in revenue. It’s reported as part of QTL.

Qualcomm’s licensing segment, QTL, which sells access to technologies needed for cellular service, reported an 18% decrease in revenue to $1.29 billion.