• Chipmaker Qualcomm says that the smartphone sales slump that kneecapped Samsung is set to continue at least until the end of the calendar year.
• The company made a grim forecast for the next quarter, adding that it would have to begin cutting staff in response of poor financial performance.
• It said that smartphone makers are so hesitant about slow sales that they are not ordering new chips for new devices.

The largest manufacturer of smartphone chips in the world, Qualcomm signalled a grim forecast for its latest financial results as the quarter comes to a close.

Qualcomm forecasted that sales in the fourth quarter would be below market expectations and that it would likely need to cut jobs as consumer spending on smartphones continues to be weak due to poor global economic conditions.

In terms of what the San Diego firm is basing its forecast on, it says that the impact of macroeconomic headwinds, weaker handset sales globally, and the fact that phone makers are using existing inventory to build devices rather than putting in fresh orders on chips, as per Reuters.

Additionally, it confirmed to investors that Huawei, one of the largest OEMs on the planet, had not placed any new orders on chips and that Qualcomm expects no further sales from the Chinese telecom giant. Qualcomm CFO Akash Palkhiwala said the firm expects no more “material revenue” from Huawei, one of its biggest customers.

China’s slower-than-expected economic recovery also weighs heavily on Qualcomm, since so many smartphone manufacturers call the country home, and so many Chinese individuals buy their products.

Reuters cites data to point out that smartphone shipments in China were down 5 percent in the June quarter.

Qualcomm is far from being the only tech firm to be affected by poor markets. The chip slump directly caused Samsung to report one of its worst quarters ever with profits down to just $460 million from $10 billion the same time a year prior.

PC parts maker Intel also reported poor performance earlier this year as consumer tightened their budgets when it comes to computers for entertainment. Even the usually resolute gaming market has been affected, though not as much as smartphones.

For its incoming results, Qualcomm says it expects fourth-quarter revenues of $8.1 billion to $8.9 billion. It added that it would begin the process of reducing its workforce to mitigate some of the impact of losing Huawei’s bag and the continued market slump.

In May, Qualcomm CEO Cristiano Amon warned that the smartphone industry would only begin recovering after “a number of quarters” but did not give an exact timeline. However the company does expect manufacturers to use existing inventory of chips “through the end of the calendar year.”

The company recently unveiled its latest chipset, the 5G-enabled Snapdragon 4 Gen 2, noting improved CPU speed, camera performance, support for AI and enhanced connectivity for budget smartphones.