Qualcomm forecasts weak quarterly profit, expects Apple r…

Qualcomm has forecasted a weaker fourth-quarter profit, predicting adjusted earnings between $2.05 and $2.25 per share, below the expected $2.36. The company anticipates a decline in revenue from Apple products due to supply constraints, estimating fourth-quarter revenues between $9.7 billion and $10.5 billion, also short of expectations. The CEO, Cristiano Amon, highlighted rising supply chain costs as an issue and mentioned plans to raise prices from September 1 to improve margins. Qualcomm expects sales primarily from non-smartphone categories in fiscal 2027, shifting focus towards AI data centers and predicting significant revenue from that sector by 2029. The dependence on smartphone sales has led to a drop in revenue from Qualcomm's handset unit, which fell by 20%.

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July 29 (Reuters) - Qualcomm (QCOM.O), opens new tab forecast fourth-quarter profit below Wall Street estimates on Wednesday, and said revenue from Apple (AAPL.O), opens new tab products would decline faster than expected as supply constraints and rising costs weighed on its business.

Shares of the San Diego, California-based company were down more than 3% in ‌extended trading.

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In an interview with Reuters, CEO Cristiano Amon said costs had risen not just for memory chips, but across the supply chain.

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Qualcomm plans to raise prices starting September 1 in an effort to return its margins to historical levels, he said.

"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."

Qualcomm also said it expects revenue from Apple products to ⁠decline more quickly starting in the fourth quarter as supply constraints reduce its share of components used in the next iPhone launch to well below its earlier estimate of 20%.

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"It's availability of supply," Amon told Reuters of the Apple share change.

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

"We kind of replaced Apple with the data center," Amon said.

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

"These results show that as Qualcomm is diversifying, it has lost focus on its core mobile market," Seaport analyst Jay Goldberg said. "They are seeing share shift away from them in Android and have lost almost all remaining share at Apple."

Qualcomm shares lag chipmakers as memory crunch bites

Line chart comparing Qualcomm's price performance with Intel, AMD, Nvidia and the Philadelphia Semiconductor index.

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Qualcomm expects adjusted profit to ‌be between $2.05 ⁠and $2.25 per share in the fourth quarter, below analysts' average estimate of $2.36, according to data compiled by LSEG.

It forecast revenue of between $9.7 billion and $10.5 billion during the period, compared with estimates of $10.02 billion.

Revenue in its chip segment is expected to be between $8.4 billion and $9 billion, while analysts were expecting $8.49 billion.

Qualcomm reiterated that revenue from Chinese phone makers bottomed out in the third quarter as customers worked through excess inventory.

Xiaomi (1810.HK), opens new tab, Oppo and Vivo posted the steepest shipment declines ⁠among the top five global smartphone vendors in the June quarter, according to Counterpoint Research.

Smartphone slowdown hits Qualcomm's revenue growth

Column chart showing Qualcomm's revenue growth

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While unit sales of Android phones began to recover, Amon said handset makers were forced to raise prices, which in turn prompted buyers to look toward the bottom end of the premium phone segment, or even at ⁠older models, both of which hurt Qualcomm margins.

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"There was a mix change versus what we expected," Amon said.

Revenue from its handset unit, which makes chips for smartphones, fell 20% to $5.09 billion in the third quarter, dragging the chip segment's revenue down 5% to $8.50 billion.

Analysts polled ⁠by Visible Alpha expected handset revenue of $4.96 billion.

Qualcomm's broad exposure to devices such as smartphones makes its results a closely watched indicator of demand trends across consumer electronics.

Its third-quarter revenue fell 4% to $9.95 billion, beating estimates of $9.67 billion. Adjusted profit came in at $2.21 per share, compared with estimates of $2.23.

Reporting by Anhata Rooprai in Bengaluru and Stephen Nellis in San Francisco; Editing by Sriraj Kalluvila

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