What you need to know
- Qualcomm is expecting a 30% drop in smartphone shipments in Q3 2020.
- This prediction comes as shipments decreased by 21% in Q2.
- The company is still, however, maintaining its 5G expectations.
Qualcomm is expected to supply the 5G modem for Apple's upcoming iPhone 12 lineup, but the company is predicting an overall major decrease in smartphone sales for 2020. According to a new report from CNBC, the chipmaker expects a 30% drop in smartphone shipments next quarter.
"Our guidance for the third quarter of fiscal 2020 being based on a planning assumption that there will be an approximate 30% reduction in handset shipments relative to our prior expectations."
This prediction is based on the fact the global smartphone market has declined by 21% in the second quarter of 2020, a trend that Qualcomm expects to continue into the next quarter.
"Qualcomm said that the coronavirus pandemic reduced demand for phones in the second quarter about 21% compared to its previous expectations and on a year-over-year basis, primarily driven by China. It also warned of lower phone shipments in the quarter ending in June, as the pandemic has chilled non-China economies around the world."
That said, the company's plans for 5G are not slowing down. Qualcomm CEO Steve Mollenkopf says that "overall, 5G is progressing as planned."
"There's been a lot of intensity to maintain those schedules. My guess is you'll see things move around a little bit because of just people dealing with the environment they're dealing with ... but in general, I don't think you're going to see big changes in that."
Patrick Moorhead, president and analyst at Moor Insights, says that Qualcomm is currently sticking to its production schedule of 175-225 million units.
"The biggest surprise, however, is that the company is sticking to its annual 5G handset unit forecast of 175-225 million units which are very profitable for the company ... this is a very good sign for the company as it indicates 'business as usual' for 5G handsets."
While the overall smartphone market is expected to take a hit, it appears that Qualcomm is still betting big on 5G and the new iPhone 12.