The smartphone market slowed down due to a shortage of components: Qualcomm disappointed expectations, shares fell by 10%.

Short overview of the situation

Many analysts are already predicting a decline in the smartphone market due to memory shortages and rising component costs. Now suppliers of other parts involved in phone assembly are joining them. Qualcomm disappointed investors with its latest revenue forecast.

Stock drop

After management announced that this quarter’s revenue is expected to be between $10.2 billion and $11 billion, and EPS will not exceed $2.55, Qualcomm shares fell almost 10%. The average forecast of $10.6 billion is noticeably lower than the expected $11.2 billion. At the same time analysts had projected a more attractive EPS of $2.89.

Reasons for revenue decline

The purchase of expensive smartphones remains stable, but Qualcomm customers, especially from China, will produce fewer devices: they lack memory and other components are becoming pricier. This hampers achieving goals in the mobile processor market, and the company’s other business lines cannot offset the drop.

Management’s words

“Despite the overall memory shortage, we remain optimistic about demand for premium models,” said Qualcomm CEO Cristiano Amon.

In the previous quarter the company finished a 5% revenue growth at $12.3 billion, beating analysts’ expectations. However in the smartphone processor segment it did not meet forecasts: actual sales were $7.82 billion instead of the planned $7.86 billion. The Internet‑of‑Things segment showed higher revenue—$1.69 billion versus expected $1.1 billion.

Future plans

Qualcomm will begin supplying its first server components for AI infrastructure next year. These products will be received by the startup Humain, backed by Saudi Arabian government funds.