Qualcomm’s core phone business is under pressure, and the company is asking investors to look at data centers instead.
Qualcomm reported fiscal fourth-quarter results on November 4 that topped Wall Street estimates, with adjusted earnings of $2.17 per share against $2.16 expected and adjusted revenue of $10.44 billion, CNBC reports. But its forecast came in lighter than expected and the stock slid 7% in extended trading.
Phones hit by the memory crunch
Rising memory costs are forcing handset makers to raise prices, which is hurting demand. Adjusted revenue fell 7% from a year earlier. Even after Qualcomm raised prices in September, handset chip sales dropped 26% to $5.14 billion. The company said it is starting to see sequential growth there and that Android shipments in China have bottomed, but it expects the handset market to be flat in 2027.
For the current quarter, Qualcomm guided to earnings of $2.15 to $2.35 per share on revenue of $10.4 billion to $11.2 billion. Analysts had expected $2.27 per share.
The data center pitch
CEO Cristiano Amon said Qualcomm had $650 million in data center revenue in the quarter, mostly from customization and connectivity work, and expects $5 billion in data center revenue in fiscal 2027. He said the company recently signed a customer for optical connectivity and has engaged a global hyperscaler. “We don’t have a demand issue; it’s a supply issue,” Amon said. “If I had more supply, I would probably be doing better.”
Bright spots elsewhere
Automotive revenue jumped 89% year over year to $1.99 billion, beating expectations. Internet of things revenue rose 4% to $1.88 billion. Licensing revenue fell 7% to $1.3 billion; Qualcomm said it renewed license agreements with Apple, Huawei and Transsion during the quarter. The results came the same day Qualcomm announced its 5G infrastructure deal with SpaceX.
Why it matters
The global memory shortage is now visibly hitting device makers and their suppliers. Expect pricing pressure and longer lead times across phones, PCs and other hardware into 2027.
For B2B tech marketers, Qualcomm’s pivot is one more sign that AI infrastructure is where budgets are moving. Vendors in automotive tech, connectivity and data center supply chains should align their messaging with that shift.
Source: CNBC, The Verge. Written by the xRapid Media LLP team.
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