Qualcomm has warned that soaring memory prices will mean the smartphone industry will slow, news that so spooked investors they sent the company’s share price sliding by 11 percent.
CEO Cristiano Amon opened the chip design firm’s Q1 2026 earnings call with news of $12.3 billion revenue, a company record, which he said came thanks to strong sales of premium smartphones and growing interest in smart glasses, automotive, and Internet of Things products.
But he quickly turned pessimistic by warning “In the coming quarters, the handset industry will be constrained by the availability and pricing of memory, particularly DRAM.” Those constraints, he said, stem entirely from memory-makers prioritizing memory for AI datacenters and reducing the amount of other memory they make. The laws of supply and demand have kicked in, sending the price of DRAM soaring.
Amon said “several” handset-makers, especially in China, are therefore “taking a cautious approach in reducing their chipset inventory.”
CFO Akash Palkhiwala said that caution means Qualcomm’s smartphone customers have “scaled-back expectations for build plans” and will make fewer devices, which means lower sales for Qualcomm.
The news isn’t all bad, because caution among smartphone-makers doesn’t reflect lower demand for their devices. Instead, Amon said, it’s a sign they just don’t think they’ll be able to source much memory and have therefore scaled back their ambitions. The CEO thinks Qualcomm won’t struggle in this market over the long term.
But this mess will hurt in the short term, because Qualcomm predicted Q2 revenue will be $10.2 billion to $11 billion, nasty numbers given the company won $11 billion of revenue in Q2 last year. $6.9 billion of that came from selling chips for handsets. This year, the company thinks that figure for Q2 will be $6 billion.
While AI is messing up Qualcomm’s smartphone business, the company is also trying to cash in on the brainbox boom with its own inferencing silicon. Amon said Qualcomm has started shipping product to its sole confirmed customer – Humane – and is helping the outfit to run third-party workloads.
“You would imagine that a company at our size will be engaged in conversations with some of the largest hyperscalers and cloud service providers in the industry,” Amon said, adding “We’re getting good traction.” Revenue from the AI silicon will arrive next year.
Amon said Qualcomm also has bright prospects in robots, cars, and patent licensing deals. The CEO hopes all will help Qualcomm diversify and grow revenue in time to hit a 2029 target for the company to be less reliant on smartphones.
In the present, Qualcomm remains reliant on smartphone revenue and investors decided these results mean its shares should sell for around $134 apiece, well down from the $150-plus they were willing to pay earlier in the day. ®