Qualcomm’s financial results for the quarter ending June 30 and its outlook for the current quarter both disappointed investors. The issue? Smartphone demand is waning as the industry waits for 5G to drop.

Qualcomm posted net income of $1 billion on revenues of $4.9 billion in the quarter, both of which were significant declines year-over-year and fell under analyst expectations. In the same quarter in 2018, Qualcomm posted net income of $1.5 billion on revenues of $5.6 billion.

“We delivered another solid quarter operationally in the midst of slower demand for 4G devices as the market prepares for the global transition to 5G,” Qualcomm CEO Steve Mollenkopf said in a prepared statement. “Our 5G design wins have doubled over the last three months, leaving us extremely well-positioned as 5G ramps in early calendar year 2020.”

The problem, of course, is that calendar year 2020 leaves two more quarters in which Qualcomm will need to navigate a declining market for its mobile chipsets. The firm’s stock dropped 5 percent in after-hours trading, largely attributed to that gap.

According to Qualcomm, China and Huawei, in particular, figure prominently in its coming troubles in 2019.

“As a result of the export ban, Huawei shifted [its] emphasis to building market share in the domestic China market where we do not see the corresponding benefit in product or licensing revenue,” Mr. Mollenkopf said in a post-earnings conference call. “In addition, our customers in the China market are working through their existing 4G inventory and deemphasizing their second-half 2019 4G launches as they shift their priority to their 5G launches in early 2020. As a result, we do not expect the typical seasonal benefits given this unique market dynamics.”

For this reason, Qualcomm lowered its global device shipments estimate for 2019 by 100 million units to a range of 1.7 billion to 1.8 billion units.

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