Qualcomm reported fiscal third-quarter earnings that met analyst expectations on Wednesday, though the company’s outlook for the following quarter proved less optimistic than anticipated. The semiconductor manufacturer attributed the conservative guidance to ongoing supply constraints affecting computer components, particularly memory chips. Share prices declined in after-hours trading following the announcement.
Executive leadership outlined plans to mitigate margin compression through price increases beginning September 1 across the company’s chip offerings, which predominantly serve smartphone manufacturers. CEO Cristiano Amon noted that input costs across wafer fabrication, assembly, testing, advanced packaging, and materials have risen broadly throughout the semiconductor industry. For the current quarter, Qualcomm projected adjusted earnings per share between $2.05 and $2.25 on revenue ranging from $9.7 billion to $10.5 billion, below analyst expectations of $2.36 per share on $10.02 billion in sales.
Handset chip sales totaled $5.1 billion, representing a 20% year-over-year decline that the company attributed to market saturation in China. Consumer purchasing patterns have shifted toward lower-priced devices and previous-generation phones due to elevated memory costs, Amon explained. Even in the premium Android segment where Qualcomm maintains market dominance, buyers are seeking more affordable options. Net income during the period fell to $2 billion from $2.66 billion in the year-ago quarter.
The company is actively diversifying beyond smartphones, targeting 60% of revenues from non-handset sectors next year. The automotive division emerged as a growth engine, generating $1.59 billion in sales and securing a digital cockpit chip supply agreement with BMW. Internet of Things revenue rose 9% annually to $1.83 billion. Qualcomm also completed its acquisition of Modular, a software company specializing in AI programming technology, and indicated plans to unveil an AI software platform at an upcoming conference in August. The licensing division reported $1.28 billion in quarterly revenue, exceeding analyst estimates.
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