Qualcomm Inc. tamped down expectations for sales growth next quarter saying the payoff from the introduction of smartphones capable of using new high-speed wireless networks will take longer than anticipated.

The chipmaker, which has tied its success to the roll out of fifth-generation, or 5G, networks, gave a sales forecast for the second fiscal quarter that topped analysts’ estimates. But revenue will be little changed in the following three-month period ending in June, Chief Financial Officer Akash Palkhiwala said Wednesday on a conference call after earnings were reported.

Analysts had predicted Qualcomm’s revenue would increase quarter over quarter through the year. Shares, which had initially gained in extended trading, fell about 2% on the remarks.

Consumers have been hanging on to handsets longer as technology advances slow. Qualcomm and the rest of the industry are arguing that 5G will reverse that trend. While 5G networks are beginning to roll out, much of that demand won’t come until the introduction of new smartphones in the September quarter, Palkhiwala said.

“We expect the next inflection point with the launch of additional 5G flagship handsets to be in the fourth quarter and extend into fiscal 2021,” Palkhiwala said on the call. “We expect our third fiscal quarter performance to be in line with our second fiscal quarter.”

Revenue will be US$4.9 billion to US$5.7 billion in the fiscal second quarter, which ends in March, the San Diego-based company said in a statement. Analysts, on average, estimated US$5.1 billion, according to data compiled by Bloomberg. Fiscal first-quarter sales and profit also beat estimates.

The company has factored in the possible disruption of the coronavirus in China, the biggest market for smartphones, on consumer demand, Palkhiwala said.

Qualcomm shares declined to a low of US$86.68 in extended trading after closing at US$90.91 in New York. The stock has gained 79% in the past 12 months.

In the first quarter, net income fell to US$925 million, or 80 cents a share, from US$1.07 billion, or 87 cents, a year earlier. Excluding certain items, profit was 99 cents a share, compared with an average estimate of 85 cents.

Revenue rose 4.9% to US$5.08 billion in the period, which ended Dec. 29. Analysts on average had predicted US$4.83 billion in sales. It was the first year-over-year sales growth in six quarters.

The chipmaker is the largest provider of technology underpinning modern phone networks, making its results a key indicator of industry demand. Qualcomm predicted that as many as 1.85 billion phones will be sold in 2020, a return to growth after a decline last year.

The company gets the bulk of its profit from licensing patents that it says cover the fundamentals of modern phone systems. Qualcomm charges a percentage of the selling price of each handset, payable by phone makers regardless of whether they use its chips. The company’s modems and processors provide it with the majority of revenue.

Technology licensing revenue jumped 38% to US$1.4 billion in the fiscal first quarter, but the company projected a decline to US$1 billion to US$1.2 billion in the current period. The chip division generated US$3.6 billion, falling 3.2% from a year earlier. Qualcomm predicted sales will reach as much as US$4.5 billion this quarter.

The company is emerging from years of legal disputes and regulatory proceedings that threatened its licensing model. It still has to reach an agreement in a patent-fee standoff with China’s Huawei Technologies Co. and overturn a sweeping U.S. antitrust decision through an appeal that is due to start next week.

Qualcomm settled a broad-ranging legal dispute with Apple Inc. and the iPhone maker agreed to resume using Qualcomm chips. But a Federal Trade Commission case alleged unfair business practices and Qualcomm has been ordered to renegotiate patent licenses. The company has won a stay on that decision. Other branches of the U.S. government have said they support Qualcomm’s position against the FTC and the lower court, sparking optimism it will succeed.