Qualcomm forecasts weak Q4 profit

Qualcomm said supply constraints would reduce its share of components used in the next iPhone launch to well below its earlier estimate of 20%

Qualcomm forecast fourth-quarter profit below estimates and said revenue from Apple products would decline faster than expected, but signalled that growth in data-centre and other non-handset businesses ​would more than make up for the lost revenue by fiscal 2027.

Shares of the company were down more than 4% ‌in extended trading on Wednesday, while Apple shares were flat.

Qualcomm said supply constraints would reduce its share of components used in the next iPhone launch to well below its earlier estimate of 20%.

It’s availability of supply, CEO Cristiano Amon told Reuters in an interview.

Qualcomm also plans to raise prices starting September 1 in ​an effort to return its margins to historical levels, he added, citing rising costs across the supply chain, not just for ​memory chips.

We’re just passing through big cost increases that we have, Amon said, noting that Qualcomm will ⁠have to negotiate with each customer. The temporary disconnect between cost and pricing causes a slight decline temporarily in gross margin.

For fiscal ​2027, the company expects the majority of its chip sales will come from categories other than smartphones.

On an earnings conference call, Chief Financial Officer ​Akash Palkhiwala said growth in Qualcomm’s non-handset businesses in fiscal 2027 is expected to replace all Apple-related revenue from fiscal 2026.

Qualcomm has been expanding into the fast-growing AI data-centre market, and is targeting $5 billion in revenue from the business by fiscal 2027 and $15 billion by 2029.

We kind of replaced Apple with the data ​centre, Amon said.

On the call, the CEO said Qualcomm has begun wafer production for its two custom chip deals with hyperscale customers, which ​will start generating revenue in the December quarter.

He added the company has completed the tape-out of its first-generation high-bandwidth compute chip, which combines compute and ‌memory in ⁠a single package, ahead of a planned mid-2027 launch.

The good news longer term is the company is quickly pivoting to non-handset revenues with record numbers in chips for the automotive industry and the launch of their first major data centre products later this year, said Bob O’Donnell, chief analyst at TECHnalysis Research.