Qualcomm forecast fourth-quarter profit below Wall Street estimates on July 29, with the US chipmaker saying revenue from Apple products would decline faster than expected due to supply constraints and rising costs.
Qualcomm's expected adjusted profit for Q4, below analysts' estimate of $2.36.
Qualcomm expects adjusted profit of $2.05 to $2.25 per share in the fiscal fourth quarter, below the average analyst estimate of $2.36, according to LSEG data. Revenue is forecast between $9.7 billion and $10.5 billion, compared with estimates of $10.02 billion. The chip segment revenue is expected to be between $8.4 billion and $9 billion, while analysts had expected $8.49 billion.
We're just passing through big cost increases that we have.
CEO Cristiano Amon said costs had risen not just for memory chips but across the supply chain. Qualcomm plans to raise prices starting September 1 to return margins to historical levels, according to Amon. He noted that the company expects revenue from Apple products to decline more quickly starting in Q4 as supply constraints reduce its share of components used in the next iPhone launch to well below its earlier estimate of 20%, describing the change as due to "availability of supply."
Qualcomm's broad exposure to smartphones makes its results a closely watched indicator of demand trends across consumer electronics. For fiscal 2027, Qualcomm expects the majority of its chip sales will come from categories other than smartphones. Amon remarked, "We kind of replaced Apple with the data center."
Qualcomm shares fell more than 4% in extended trading after the forecast. In the third quarter, revenue fell 4% to $9.95 billion, beating estimates of $9.67 billion, while adjusted profit came in at $2.21 per share, compared with estimates of $2.23.
Qualcomm reiterated that revenue from Chinese phone makers bottomed out in Q3 as customers worked through excess inventory. However, Chinese smartphone makers Xiaomi, Oppo and Vivo posted the steepest shipment declines among the top five global smartphone vendors in the June quarter, according to Counterpoint Research. Amon said handset makers were forced to raise prices, prompting buyers to look toward the bottom end of the premium phone segment or older models, hurting Qualcomm margins. "There was a mix change versus what we expected," he said.