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Qualcomm: AI's Memory Hunger Cut Handset Sales 26%
Qualcomm's handset revenue fell 26% to $5.14 billion as memory makers shifted output to AI data centres. It still targets $5 billion of data-centre sales in fiscal 2027.
The AI build-out has a cost that shows up far from the data centre: in the phones that cannot get enough memory. Qualcomm reported on Wednesday, November 4, that handset chip revenue fell 26% from a year earlier to $5.14 billion in its fiscal fourth quarter, slightly below the StreetAccount estimate of $5.21 billion, as memory shortages weighed on smartphone production. The shares fell about 7% after hours.
Qualcomm does not make memory, but its customers need it. Memory producers have shifted capacity towards high-bandwidth memory for AI accelerators, leaving less mobile DRAM and flash for phones and raising its price, so handset makers build fewer devices and buy fewer processors. The company's own forecast for the December quarter, earnings of $2.15 to $2.35 a share against $2.27 expected, reflected the same pressure.
Group revenue was $10.44 billion on an adjusted basis and earnings were $2.17 a share, a cent above the LSEG consensus, because other businesses grew. Automotive revenue rose 89% to $1.99 billion, well above the $1.66 billion StreetAccount estimate, and IoT rose 4% to $1.88 billion. Licensing revenue fell 7% to $1.3 billion, while the company renewed agreements with Apple, Huawei and Transsion.
Then there is the business that is meant to benefit from AI directly. Qualcomm's data-centre revenue was $650 million in the quarter, mostly from custom chips and connectivity work, and the company expects $5 billion in fiscal 2027 after signing an optical connectivity customer and engaging a global hyperscaler. Chief executive Cristiano Amon said of that business: "We don't have a demand issue; it's a supply issue," adding, "If I had more supply, I would probably be doing better."
The quarter shows AI as both headwind and opportunity for the same company. The memory that AI accelerators absorb is taken from phones, and the supply chains that serve hyperscalers are the ones Qualcomm is trying to join. Until memory output catches up, investors are likely to weigh every handset forecast against the promise of the $5 billion target, which is still a year away.
Sources: CNBC — Qualcomm stock drops 7% on weak earnings forecast as memory shortage weighs on smartphone sales (Nov 4, 2026); CNBC — Stocks making the biggest moves after hours: Coherent, AppLovin, Expedia, Qualcomm and more (Nov 4, 2026)