Qualcomm $QCOM reported fiscal third-quarter net income of $2 billion, or $1.87 per diluted share, on Wednesday, down 25% from $2.67 billion, or $2.43 per diluted share, in the same period a year earlier. Revenue fell 4% to $9.95 billion.
The chipmaker plans to raise prices starting September 1 to offset industry-wide cost increases, while its outlook for the current quarter came in below analyst expectations
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Qualcomm $QCOM reported fiscal third-quarter net income of $2 billion, or $1.87 per diluted share, on Wednesday, down 25% from $2.67 billion, or $2.43 per diluted share, in the same period a year earlier. Revenue fell 4% to $9.95 billion.
Qualcomm attributed the earnings pressure to industrywide cost inflation spanning the chip manufacturing supply chain — from wafer fabrication and assembly through advanced packaging and memory, the company said. Handset chip revenue, Qualcomm's largest segment, dropped 20% year over year to $5.1 billion. Qualcomm stock fell 7.6% in after-hours trading.
Qualcomm President and CEO Cristiano Amon said the company plans to raise chip prices across the board beginning September 1 to offset the higher input costs. "Cost went up, prices are going to go up," Amon told CNBC. The company said it expects the pricing changes to benefit gross margins over time as they gradually take effect.
Amon also attributed part of the handset weakness to shifting consumer preferences. He pointed to memory price increases as a drag on affordability, saying shoppers are opting for cheaper options within the premium tier or simply holding onto last year's handset, he told CNBC.
Automotive stood out as the strongest performer, with sales climbing 61% year over year to $1.59 billion and extending the segment's streak of double-digit annual growth to 23 consecutive quarters, the company said. Internet of Things revenue grew 9% to $1.83 billion. Combined, the two segments grew 28% year over year.
Looking ahead to the fiscal fourth quarter, Qualcomm said it anticipates adjusted EPS in the range of $2.05 to $2.25 and revenue between $9.7 billion and $10.5 billion. Analysts had expected adjusted earnings of $2.36 to $2.38 per share on revenue of roughly $10.02 billion to $10.07 billion, according to The Wall Street Journal.
The earnings came weeks after Qualcomm outlined an expanded data center AI strategy at its 2026 Investor Day, where it raised its fiscal 2029 non-handset revenue target to $40 billion and announced that Meta $META Platforms would use its new Dragonfly C1000 central processing units. Amon said on Wednesday that non-handset revenue growth is expected to accelerate from 24% in fiscal 2026 to more than 60% in fiscal 2027, the company said.
Qualcomm also said Wednesday it had completed its acquisition of Modular Inc., an AI software startup. The deal, valued at $3.92 billion in an all-stock transaction, is intended to strengthen Qualcomm's software capabilities for data center AI inference and deployment.
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