Qualcomm, the prominent chip manufacturer based in San Diego, has announced a disappointing revenue and profit outlook for the second quarter, falling short of Wall Street’s expectations. The company attributes this setback to an ongoing global shortage of memory chips, which has had a significant impact on mobile phone sales. Following the announcement, Qualcomm’s stock experienced a sharp decline of 6.7 per cent in after-hours trading.
Memory Chip Shortage Takes Toll
In an interview with Reuters, Qualcomm’s CEO, Cristiano Amon, clarified that the company’s forecast miss is directly linked to the difficulties faced by its smartphone customers due to the memory chip shortage. “I’m very happy with the business – I just wish we had more memory,” Amon remarked, emphasising that major original equipment manufacturers (OEMs), particularly in China, are reducing their inventory levels to adapt to the constrained memory supply.
For the upcoming fiscal second quarter, Qualcomm anticipates revenues between $10.2 billion and $11 billion, falling short of the analysts’ average estimate of $11.12 billion, as reported by LSEG data. The company also predicts adjusted earnings for the quarter to be between $2.45 and $2.65 per share, compared to an estimated profit of $2.89.
Recent Financial Performance
In its fiscal first quarter ending December 28, 2025, Qualcomm reported a revenue of $12.25 billion, which surpassed estimates of $12.21 billion. The company’s adjusted profit stood at $3.50 per share, exceeding estimates of $3.41. Qualcomm’s chip revenues for the December quarter reached $10.61 billion, slightly above the $10.60 billion expected.
However, within this segment, smartphone chip sales totalled $7.82 billion, missing the Visible Alpha estimate of $7.87 billion. On a brighter note, automotive chip sales of $1.10 billion exceeded expectations, while revenue from the Internet of Things (IoT) met predictions. Licensing revenues also showed positive growth, amounting to $1.59 billion, compared to LSEG’s estimate of $1.46 billion.
Industry Trends and Future Outlook
As one of the world’s leading suppliers of smartphone chips, Qualcomm’s financial outcomes are often regarded as key indicators of market trends within the personal electronics semiconductor industry. Counterpoint Research forecasts a 7 per cent decline in global shipments of advanced smartphone chips in 2026, largely attributed to rising memory prices.
Conversely, the same research predicts that smartphone chip revenues will see double-digit growth this year, fueled by robust demand for high-end devices and an increasing number of semiconductors utilised in individual gadgets. Amon noted that Qualcomm’s chips are commonly found in premium Android devices, which are more resilient to memory price fluctuations. He highlighted that OEMs will likely focus on ensuring memory availability for their most profitable segments, prioritising high-tier products over mass-market options that are more sensitive to price increases.
In the chip segment, Qualcomm forecasts second-quarter sales to average around $9.1 billion, while analysts had projected $9.60 billion. The company is also facing challenges as major clients like Apple and Samsung begin to develop their own in-house chips, intensifying competition from firms like MediaTek in the Android market.
Why it Matters
Qualcomm’s struggles amid a memory chip shortage underscore a broader issue affecting the semiconductor industry and its supply chain. As companies grapple with rising costs and inventory adjustments, the implications extend beyond Qualcomm, reflecting a volatile market landscape that could impact consumers and manufacturers alike. With the demand for advanced technology ever-growing, the dynamics of chip supply and pricing will play a crucial role in shaping the future of the mobile and electronics sectors.
