Qualcomm shares plunged 7% after the chipmaker issued disappointing guidance as skyrocketing demand for artificial intelligence data centers eats away at memory chip supply for consumer electronics.
On an earnings call with analysts, Qualcomm CEO Cristiano Amon said the weakness was “100% related to memory.”
The availability of dynamic random access memory, commonly used in smartphones, computers and wearable tech, was down from a year ago.
Amon said handset demand remains strong, but memory supply is down as more resources go toward high-bandwidth memory used in data centers.
“The problem is, all of the memory vendors have dedicated all the capacity to data centers,” and supply availability for consumer electronics will be lower but costlier year over year, Amon told CNBC’s Jon Fortt.
qualcomm year-to-date stock chart.
The California-based company topped fiscal first-quarter estimates but forecasted adjusted earnings per share between $2.45 and $2.65 on revenue of $10.2 billion to $11 billion this current quarter. Analysts polled by LSEG had forecast $11.11 billion in sales and earnings of $2.89 per share.
Amon said in an interview that he was unsure whether smartphone makers would hike prices, but that he expects the shortage to hamper supply.
He also said the company’s customers focus on higher-tier devices, making them more capable of absorbing memory price increases.
Companies across the tech sector are starting to feel the pinch from the memory crunch. Arm also fell post-earnings on smartphone memory chip worries. Apple warned last week that it can’t get enough chips to meet strong iPhone demand.
The supply and demand imbalance is helping memory chipmakers, including Micron Technology and Samsung Electronics, and contributing to higher prices.
Amon told CNBC that he’s “very confident” that Qualcomm will see AI and data center revenue in fiscal 2027.