Shares of Qorvo (QRVO 2.27%) have slipped 40% in the past year thanks to the weakness in the global smartphone market, but the company sprung a surprise when it released fiscal 2023 second-quarter results (for the three months ended Oct. 1, 2022) on Nov. 2.

The chipmaker, which is known for supplying its chips to Apple (NASDAQ: AAPL), beat Wall Street's revenue and earnings estimates. Qorvo also announced a share repurchase program worth up to $2 billion. Still, investors weren't impressed, and Qorvo stock fell following the quarterly report. Let's see why.

The smartphone weakness is hurting Qorvo

Qorvo reported $1.16 billion in fiscal Q2 revenue, down 7% from the prior-year period. The chipmaker attributed the decline to weakness in the Android smartphone ecosystem. The production ramp of Apple's latest iPhone 14 lineup wasn't enough to help offset the weakness in Android smartphones. Qorvo management pointed out that its cellular revenue increased 15% sequentially thanks to its largest customer.

However, lower shipments of Android smartphones led to a 17% year-over-year decline in Qorvo's cellular revenue to $787 million, which was 68% of its top line. Weak volume shipments took a toll on the company's margins as well. Qorvo's adjusted gross margin was down 3.2 percentage points year over year to 49.2%. As a result, the company's adjusted earnings fell sharply to $2.66 per share last quarter from $3.42 per share in the year-ago period.

Analysts were expecting worse from Qorvo and would have settled for $2.54 per share in earnings and $1.13 billion in revenue. The company did better, but the sharp year-over-year declines in its top and bottom lines cannot be ignored. Even worse, the smartphone market's weakness is going to weigh on Qorvo's top line in the current quarter as well.

The company estimates revenue of $725 million at the midpoint of its guidance range in the ongoing quarter that ends in December. Its adjusted earnings are expected to land at $0.625 per share, along with a non-GAAP (adjusted) gross margin of 43.5%. The chipmaker had delivered $1.12 billion in revenue, 52.6% in adjusted gross margin, and $2.98 per share in earnings during the same period a year ago, which means that its revenue and earnings are on track to decline at a more alarming rate in the current quarter.

That's not surprising as smartphone sales have declined for five consecutive quarters, and the industry's fortunes aren't expected to turn around this year. A recovery is expected in 2023, but IDC warns that it could be "pushed further into the year."

Additionally, the problems at Qorvo's largest customer -- Apple -- suggest that its mobile business won't be turning around any time soon. Apple produced a third of Qorvo's total revenue last fiscal year. So, it won't be surprising to see the lockdown restrictions imposed on an industrial park that houses Apple's iPhone factory in China negatively impact Qorvo's results in the current quarter.

Also, there are reports that Apple could reduce iPhone production by 14% in the first quarter of 2023 as compared to the prior-year period, fearing that surging inflation could temper the demand for its smartphones. Market research firm TrendForce estimates that Apple is likely to produce 52 million iPhones in the first quarter of 2023, down from its prior forecast of 56 million.

All this indicates that Qorvo's biggest business is likely to remain under pressure, which is why the stock could turn out to be a value trap.

Investors shouldn't fall for Qorvo's cheap valuation

Qorvo is trading at just 13 times trailing earnings, which is a big discount to its five-year average earnings multiple of 64. The price-to-sales ratio of 2 also seems attractive compared to its five-year average sales multiple of 3.7.

But with Qorvo's earnings expected to drop nearly 50% in the current fiscal year and a turnaround in the smartphone market's fortunes still some time away, it would make sense for investors to stay away from the stock. Analysts are upbeat about the company's long-term prospects and they anticipate annual earnings growth of 10% for the next five years, but investors should wait for concrete signs of a turnaround before jumping into this hard-hit semiconductor stock.