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.
2.05 to 2.25 USD per share
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.
— Cristiano Amon, Qualcomm CEO
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.
Updates
Qualcomm clarified that the impact of planned price hikes will materialize gradually over the coming quarters, noting that near-term margins remain under pressure due to expiring contracts and new product launch cycles. Additionally, the company cited a surge in AI infrastructure spending as the primary driver behind tightened supply chains and increased costs for memory, wafers, packaging, and testing.
Qualcomm clarified that the impact of planned price hikes will materialize gradually over the coming quarters, while near-term margins remain under pressure due to expiring contracts and new product cycles. Additionally, the company identified a surge in AI infrastructure spending as a primary driver behind the tightening semiconductor supply chain, which has caused increased costs across memory, wafers, packaging, and testing.
Qualcomm anticipates that the impact of upcoming price hikes will be realized gradually over the next two quarters, noting that near-term margins remain under pressure due to expiring contracts and new product cycles. Additionally, the company identified a spike in AI infrastructure investment as a key factor tightening semiconductor supply chains and escalating costs for memory, wafers, packaging, and testing.
Qualcomm stated that benefits from planned price increases will emerge gradually over the next few quarters, noting that margins will face near-term pressure as existing contracts expire. Additionally, increased AI infrastructure spending has tightened semiconductor supply chains, driving up costs for memory, wafers, packaging, and testing.
Qualcomm stated that the benefits from upcoming price increases will emerge gradually over the next few quarters, while noting that margins will face near-term pressure due to expiring contracts and new product cycles. Additionally, rising costs for memory, wafers, packaging, and testing are being driven by tightened semiconductor supply chains resulting from a surge in AI infrastructure spending.
Qualcomm clarified that benefits from price increases will emerge gradually over the next few quarters, noting that margins will face near-term pressure as existing contracts expire. Additionally, a surge in AI infrastructure spending has tightened semiconductor supply chains, increasing costs for memory, wafers, packaging, and testing.
Qualcomm stated that benefits from upcoming price increases will emerge gradually over the next few quarters, while margins face near-term pressure due to expiring contracts and new product cycles. Additionally, rising costs for memory, wafers, packaging, and testing are being driven by tightened semiconductor supply chains caused by a surge in AI infrastructure spending.
Qualcomm reported that its QCT division revenue hit $8.5 billion, a 5% year-over-year decrease, while its QTL licensing business saw a 3% decline to $1.28 billion. Handset revenue for fiscal Q3 fell 20% to $5.09 billion, prompting conflicting fourth-quarter forecasts, with Visible Alpha analysts estimating $5.03 billion and CFO Akash Palkhiwala projecting approximately $5.2 billion. Additionally, the company has begun wafer production for two custom chip deals with hyperscale customers, expecting revenue to start in the December quarter.
Qualcomm's QCT division reported $8.5 billion in revenue, a 5% annual decrease, while the QTL licensing business saw a 3% decline to $1.28 billion. Handset revenue for fiscal Q3 fell 20% year-over-year to $5.09 billion, though CFO Akash Palkhiwala estimated fourth-quarter handset revenue at approximately $5.2 billion, contrasting with Visible Alpha analysts' estimate of $5.03 billion. Additionally, the company has begun wafer production for two custom chip deals with hyperscale customers, expecting revenue to start in the December quarter.
