Chip manufacturer Qualcomm disappointed Wall Street investors Wednesday when it projected third-quarter earnings and revenue below analyst expectations, citing continued challenges from memory chip shortages that are dampening consumer electronics demand.
The San Francisco-based company’s stock dropped approximately 4% in after-hours trading following the announcement.
Despite the lackluster projections, Qualcomm CEO Cristiano Amon expressed optimism during a Reuters interview, stating he believes the smartphone industry has reached its lowest point and will begin recovering following the company’s third fiscal quarter.
“We can now call the bottom,” Amon stated, noting that insights from the company’s licensing division, which exceeded Wall Street projections, provide visibility into smartphone manufacturers’ upcoming plans.
The semiconductor giant anticipates third-quarter revenue ranging from $9.2 billion to $10 billion, falling short of analyst estimates of $10.27 billion compiled by LSEG.
As one of the world’s leading smartphone chip suppliers, Qualcomm serves major clients including Apple, Samsung, and prominent Chinese smartphone brands.
Throughout this year, the company has navigated significant uncertainty as rising memory chip costs have driven up smartphone and PC prices, leading consumers to reduce their purchasing.
Adjusted earnings per share for the third quarter are projected between $2.10 and $2.30, below analyst expectations of $2.45 per share.
The company announced second-quarter revenue of $10.6 billion, meeting market expectations.
According to Counterpoint Research, worldwide smartphone shipments dropped 6% during the first quarter due to the memory shortage crisis, with the supply constraints potentially continuing through late next year.
Given Qualcomm’s extensive involvement in consumer electronics through chips for wireless audio devices and automotive computing systems beyond smartphones, industry analysts view the company’s performance as a key indicator of market conditions and supply-demand trends.
Chinese smartphone manufacturers are expected to present additional challenges for Qualcomm as domestic brands experience declining sales amid the memory chip shortage. Budget and mid-range devices are anticipated to face greater impact compared to premium smartphone producers.
Qualcomm shares have declined roughly 10% year-to-date after gaining more than 11% in 2025, as investors assess the effects of tight memory supplies driven by artificial intelligence data center demand.
Last month, the company announced a $20 billion share repurchase program aimed at reassuring investors during the demand slowdown.
Beyond smartphones, Qualcomm is pursuing entry into the expanding data center chip sector, with product shipments scheduled to begin before year-end.
During Wednesday’s announcement, Amon revealed the company is collaborating with clients on three chip categories: central processing units, inference accelerators, and application-specific integrated circuits (ASICs), a growing market where competitors like Broadcom and Marvell are active.
“We have engagement on a custom ASIC, which is what we wanted to do when we bought AlphaWave,” Amon explained, “and now we have a lot of connectivity (intellectual property) that enables us to do that. We’re executing on all three” chip categories.
Industry analysts suggest that increased chip usage in smartphones and computers driven by premium and AI-enhanced devices should benefit companies like Qualcomm through higher chip revenues.
Second-quarter chip segment revenue reached $9.08 billion, falling short of $9.21 billion estimates.
The company projected third-quarter chip revenue between $7.9 billion and $8.5 billion, below analyst estimates of $8.93 billion.
