Qualcomm reported lower quarterly revenue and net income, with handset revenue down 20 per cent as higher memory-chip costs constrained smartphone demand.
Revenue for the quarter to the end of June was $9.9bn, down 4 per cent, although the result exceeded the $9.7bn expected by Wall Street. Qualcomm forecast revenue of between $9.7bn and $10.5bn for the current quarter, with the midpoint broadly matching analyst expectations of $10bn.
The pressure was concentrated in Qualcomm’s handset business. Handset revenue declined 20 per cent year on year to $5bn, while net income fell 25 per cent year on year to $2bn. Chief executive Cristiano Amon said difficult memory and supply conditions were increasing costs and restricting demand.
Big Tech spending on artificial intelligence infrastructure has strained the electronics supply chain and driven up consumer prices. Lower-cost smartphone sellers have been affected more heavily than premium brands such as Apple, with memory-chip costs rising 300 per cent during the quarter.
Global smartphone shipments declined 6.7 per cent during the second quarter, marking a second consecutive quarterly fall. Apple and Samsung were the only two companies to record growth, according to the International Data Corporation.
Qualcomm is attempting to reduce its dependence on smartphone components by expanding its automotive and AI data-centre operations. Amon said non-smartphone revenue, including the automotive and data-centre businesses, would grow to $40bn by the 2029 fiscal year.
In June, Qualcomm announced Meta as the first Big Tech hyperscaler customer for its AI data-centre processors, which were launched last year. Qualcomm and Arm have both been seeking a share of the AI processor market that has helped Nvidia grow from a valuation of about $400bn to $4.6tn in approximately three years.
Qualcomm’s diversification is taking place as its long-term modem supply agreement with Apple winds down. Chief financial officer Akash Palkhiwala said Qualcomm’s share of modems supplied for the iPhone 18 family during the final quarter of 2026 would be materially below its previous estimate of 20 per cent.
Qualcomm shares fell about 4.5 per cent in after-hours trading and had declined more than 17 per cent over the preceding month. Semiconductor stocks have also weakened after rising during the first half of the year.
The Philadelphia Semiconductor Index fell more than 10 per cent during the week and was more than 25 per cent below its June record. SK Hynix added to the pressure after announcing disappointing results.
Arm delivered stronger revenue growth but also experienced a decline in its share price. The SoftBank-backed chip designer reported quarterly revenue of $1.3bn, an increase of 22 per cent year on year, and forecast revenue of $1.4bn for the current quarter, in line with analyst expectations.
Arm chief executive Rene Haas said data-centre royalties had more than doubled and demand for the company’s new AGI CPU continued to exceed expectations. Arm has been partly insulated from the smartphone downturn because Big Tech groups also use its designs in their AI infrastructure.
The company raised its revenue forecast for a new central processing unit scheduled to launch next year, with Meta and OpenAI among its first customers. Arm shares nevertheless fell about 6 per cent in after-hours trading and had declined almost 35 per cent over the previous month.
Arm also launched its own complete AI processor earlier this year, marking a move beyond its traditional model of licensing chip designs to customers. The processor forms a critical part of Project Izanagi, SoftBank chief executive Masayoshi Son’s effort to build an integrated AI infrastructure ecosystem capable of competing with Nvidia.
Qualcomm’s operating outlook now combines declining handset revenue, higher component costs and a reduced expected share of Apple’s iPhone modem requirements. Growth from its automotive and data-centre operations will therefore carry greater weight as the company works towards its $40bn non-smartphone revenue target for the 2029 fiscal year.
