Qualcomm is predicting a “double-digit” drop in phone sales

Qualcomm, one of the primary providers of chips and modems in phones, is predicting that phone sales will be down much more than expected in 2022 due to the uncertain economic environment, according to the company’s latest earnings release published Wednesday.

“Given the uncertainty caused by the macroeconomic environment, we are updating our guidance for calendar year 2022 3G/4G/5G handset volumes from a year-over-year mid-single-digit percentage decline, to a low double-digit percentage decline,” Qualcomm wrote. The company also says that “rapid deterioration in demand” and “easing of supply constraints” in the semiconductor industry have led to increased inventory and that Qualcomm’s largest customers are having to draw down their inventory.

The company’s updated guidance seems to indicate that sluggish phone sales could continue through the critical holiday sales season. In a slide deck, Qualcomm said there’s “roughly 8-10 weeks of elevated inventory,” and the company expects that issue “may take a couple of quarters to work itself through.” Qualcomm’s stock is down more than 6 percent in after-hours trading as of this writing.