Qualcomm will raise chip supply prices by double-digit percentages starting Sept. 1 to reflect higher costs stemming from a shortage of memory semiconductors. It also offered a fourth-quarter outlook below market expectations.
On the 29th (local time), Bloomberg and CNBC reported that Qualcomm, in its earnings release that day, said it expects adjusted earnings per share (EPS) of $2.05 to $2.25 and revenue of $9.7 billion to $10.5 billion for the fourth quarter (ending in September). The figures fell short of the average analyst estimate, and Qualcomm shares fell about 4% in after-hours trading.
Cristiano Amon, Qualcomm CEO, said, "Input costs have risen across the semiconductor industry, including wafer manufacturing, assembly, testing, advanced packaging, and memory," explaining the reason for the price increase. A shortage of memory driven by surging demand for AI computers is cited as the key driver of this cost pressure. Qualcomm added that, beyond price hikes, it is seeking other ways to streamline its supply chain.
Structural pressures also mounted. Qualcomm projected that revenue from Android smartphone chips will drop about 20% this fiscal year, shaving more than $1.50 off earnings per share. Apple's acceleration of its shift to in-house chips and supply constraints at contract manufacturer TSMC are also seen as drags. However, revenue from Chinese smartphone makers is expected to bottom in the third quarter and return to double-digit growth starting in the fourth quarter.
Qualcomm pointed to diversification into autos and data centers as a path forward. It signed a new digital cockpit chip supply deal with BMW and set goals of $10 billion in automotive revenue and $15 billion in data center revenue by 2029. The share of non-smartphone revenue is planned to expand from 24% this year to 60% next year.