According to reports, qualcomm is expected the company's sales and profits in the second quarter were unable to match analysts' expectations, it shows that the smartphone market slowdown, has a stress on the development of semiconductor industry.

Qualcomm said in a statement on Wednesday, the company expects its second quarter ended march revenue to $4.9 billion to $5.7 billion, according to bloomberg analysts' expectations, qualcomm in the second quarter on revenue of $5.66 billion.

Qualcomm to expand new areas to alleviate mobile phone chip market weakness

Qualcomm processor and mobile phone modem is the biggest business departments (by revenue), the department is becoming more and more squeezed in two aspects: on the one hand is the overall market is slowing, on the other hand, the competitors are also doing a lot of production that can rival qualcomm chip price or performance of the chip. At the same time, the three major smartphone makers, samsung, apple and huawei, are increasingly chip design of their own, thus further weakened the market demand.

Structural problems will not disappear

"Their problem is structural, will not disappear." Investment research institution SanfordC. An analyst at Bernstein, Stacy Rasgon said. "The market is saturated, the competitive environment worse and worse."

In December 2016 in the first quarter, qualcomm profits from $1.97 billion to $1.5 billion a year ago, sales fell to $5.78 billion.

Steve Mollenkopf qualcomm's chief executive, said the smartphone market will continue to increase, but the top brands including apple and samsung will appear "weak growth".

"On a global scale, high-end equipment slightly lower than we expected." He said.

Qualcomm to expand new areas to alleviate mobile phone chip market weakness

The overall smartphone market is becoming saturated, thus many of qualcomm customers make it difficult to continue to grow. Apple has released the iPhone since 2007 iPhone minimum growth, and for the first time made the iPhone sales will decline in quarterly forecast.

Qualcomm targeting new markets

Mollenkopf has struggled to contain and reverse the decline in sales trends, qualcomm's income has been three consecutive quarterly decline in more than 10%. Business as the company's main mobile phone chips will face more and more pressure of competition, and has also appeared in the overall economic slowdown, he tried to get the qualcomm technology to expand into new markets, such as server, automobile and medical equipment, etc.

Qualcomm to expand new areas to alleviate mobile phone chip market weakness

Last year, according to market research firm IDC, is the smartphone market for the first time in the growth rate of less than 10%. Due to weak economy problems, once the Chinese market, to promote the growth of overall global market is slow to "very low single-digit percentage" growth. The Chinese market will be more and more mobile phone purchase driven by the replacement of existing equipment, rather than new consumers to purchase for the first time.

Qualcomm is unique in the semiconductor manufacturers, because it is through the patent licensing for most of its profit. Phone manufacturers pay royalties to qualcomm, regardless of whether they use qualcomm chip. But as governments around the world to qualcomm business conduct a review of the profit pool has also hit. For example, some Chinese vendors on the grounds that the Chinese government survey of qualcomm, stop pay qualcomm it mouth the company owes to its patent royalties.

Qualcomm company President Derek Aberle said the company in terms of authorization agreement with Chinese companies are making progress. Qualcomm signed four agreements in the latest quarter, and only a few key need to win the contract.

Qualcomm says, however, due to the contract dispute with South Korea's LG electronics, the company's quarterly income will be included in the $100 million less. LG electronics said to qualcomm pay royalty is too high. Qualcomm says, however, it was assumed that LG is "no legal basis", the two companies is still in the arbitration law in the process, and is likely to continue into next year.

Gradually catch up with other company qualcomm chip performance, qualcomm's largest source of income, modem/microprocessor design and sales, are already in the industry leader in some moved. Top level of the mobile phone manufacturers are increasingly chip design of their own, because they tried to its Top mobile phone and other manufacturers of products differentiation, thus eroding the qualcomm market.

Last month, after a strategic review, qualcomm rejected some investors calling for qualcomm is split in two, and decided to remain a chip manufacturing and licensing business operations. In history, qualcomm chip business produces a patent, the patent is then transformed into profitable licensing revenues. The cash flow, in turn, will help the company to strengthen the industry's leading research and design work, making its products in terms of performance ahead of other competitors.