US chipmaker Qualcomm reported a 10.5 per cent increase in net income in its fiscal Q2 ending 27 March despite double-digit falls in revenue in both its chipmaking and licensing businesses.

Its net income during the quarter rose to $1.16 billion, with overall revenue dropping 19.5 per cent to $5.55 billion. Its chip division saw revenue fall 25 per cent, while revenue from its licensing unit declined 12 per cent.

Q2 shipment of its ‘MSM’ chips fell from 242 million units in the previous quarter to 189 million, a decline of 22 per cent, and down 19 per cent from a year ago.

The wireless chip giant lowered its profit forecast for the current quarter (its fiscal Q3), with earnings per share of $0.90-1.00 vs $0.99 a year ago, and reduced its outlook for chip shipments for the quarter.

Qualcomm expects chip shipments to fall 13-22 per cent to 175-195 million units, with 3G and 4G device shipments forecast to increase 8 per cent in Q3, which is down from its previous estimate of about 10 per cent.

Gartner expects mobile phone shipments to increase by just 2.6 per cent this year, with end-user spending predicted to rise 1.2 per cent.

The abrupt shift away from double-digit growth in the smartphone market has created uncertainty, which is reflected in its wide revenue guidance for Q3 — $5.2 billion to $6 billion compared with $5.8 billion in Q3 last year.

“We are continuing to build momentum into the second half of our fiscal 2016 with traction for our Snapdragon processors in the premium and high tiers and strong execution of our strategic realignment plan,” Qualcomm CEO Steve Mollenkopf said in the earnings call. “We’ve continued to make gains on the licensing side in China and this continues to be positive for the company.”

CCS Insight analyst Geoff Blaber noted that Qualcomm claims 115 Snapdragon 820 design wins and says it is present in over 100 ‘wearable’ devices, touting 80 per cent of Android Wear shipments.

Qualcomm said it resolved a dispute over licensing with LG last quarter and will be able to book about $200 million in revenue in its fiscal Q3 that was previously withheld.