Qualcomm expects phone shipments to drop by 30 percent next quarter due to COVID-19

Qualcomm expects smartphone shipments to fall 30 percent in the comings months due to the coronavirus pandemic, the company said today, cutting its previous projections for the next quarter.

That’s in addition to the 21 percent reduction in demand for phones that the company noted in the past quarter, which it reported in an earnings release this afternoon. Qualcomm did still manage to beat its Q2 revenue expectations despite that drop in demand, with Q2 revenue of $5.2 billion (compared to the projected $5.02 billion), but net income was down dramatically, dropping 29 percent year-over-year to $468 million.

Qualcomm says there are three coronavirus-related factors that could impact sales in the coming months:

• How the COVID-19 virus, and government policies around the world to prevent its spread, will impact business and consumer confidence
• Demand for new smartphones sold by customers or licensees that use Qualcomm products
• The state of the global wireless supply chain, distribution networks, and workforces

The company also also cites other, non-coronavirus-related factors that may impact its revenue in the company quarter, including its licensing dispute with Huawei, network rollouts, and its dependance on “a small number of customers and licensees” and the premium-tier device segment of the market.

Despite the expected drop in demand for new devices, Qualcomm is still sticking to its original estimate for 5G devices shipped in 2020, with the company expecting to see 175 million and 225 million 5G phone shipments this year. The nascent 5G market is a big part of Qualcomm’s business, with the company’s modems serving as some of the only viable options for device manufacturers to support the next-generation network — to the point where Apple was forced to settle its ongoing disputes with the company in order to get access to those modems for its upcoming 5G iPhones.