(Reuters) – Sales at Qualcomm Inc are slowing as the smartphone market heads for its worst contraction in years, and Wall Street analysts don’t expect that to turn around anytime soon.

At least 14 brokerages lowered their price targets on the largest maker of smartphone chips on Thursday after it gave a forecast $2 billion below market estimates and said it had extra inventory that could take half a year to clear.

Shares, which have already lost more than a third of their value so far in 2022, were down nearly 8% before the bell.

“We believe a weak market, and even a potential inventory correction was likely not entirely unexpected, though the magnitude is probably worse than what some might have had in mind,” analysts at Bernstein wrote in a note.

The company’s dour holiday-quarter outlook underscores the rapid decline in the smartphone market, as strict COVID-19 restrictions sap demand in top market China and a global surge in inflation weighs on consumer spending elsewhere.

The chipmaker now expects a low-double-digit percentage decline in handset sales volumes this year, compared with its prior forecast for a mid-single-digit percentage drop.

“Qualcomm’s smartphone business is more positioned in the mid-range … and the mid-range is currently the most impacted segment in the smartphone market,” said Canalys research analyst Runar Bjørhovd.

Graphic: Qualcomm’s handset segment revenue growth slips – https://graphics.reuters.com/QUALCOMM-RESULTS/lgvdkmgdapo/chart.png

“The outlook for the remainder of the year remains pessimistic, but there are hope that demand will start to pick up again towards the middle of 2023,” Bjørhovd added.

There are, however, some bright spots.

Qualcomm expects to have the vast majority of 5G modem share for the 2023 iPhone launch, up from a previous assumption of 20%. Its revenue from new focus areas such as automotive equipment, networking and computers is also rising.

(Reporting by Chavi Mehta and Aditya Soni in Bengaluru; editing by Milla Nissi)