Qualcomm's phone-chip sales fall 26%, as car chips nearly double and a data-centre bet begins

Qualcomm makes the Snapdragon chips inside many Android phones. That business, the one Qualcomm was built on, just had a hard quarter: phone-chip sales fell by about a quarter.

Qualcomm earnings for July to September, published on 4 November, show total revenue down 8% to US$10.32 billion. Car chips hit a record and the company promised that data centres will start paying next year. Investors focused on the phones, and the shares fell in late trading, by about 3% to more than 5%, depending on the report.

Phones down 26%, cars up 89%: inside Qualcomm’s Q4 earnings

Qualcomm’s own release, for the quarter that ended on 27 September, shows a company pulling in two directions:

• Phone chips: US$5.14 billion, down 26% from US$6.96 billion a year earlier. Investing.com and Bloomberg both put analysts’ estimate at about US$5.25 billion.
• Car chips: a record US$1.99 billion, up 89%. Investing.com says analysts expected about US$1.69 billion.
• Smart devices (IoT): US$1.89 billion, up 4%.
• Licensing: US$1.30 billion, down 7%. This is the money phone makers pay to use Qualcomm’s patents.
• Profit: adjusted earnings of US$2.17 a share, down 28%. Investing.com puts the estimate at US$2.16.

Overall revenue still came in above the roughly US$10.1 billion analysts expected, according to both Bloomberg and Investing.com.

For the full fiscal year, Qualcomm revenue in 2026 was US$43.1 billion, down 3%. Phone chips brought in US$24.07 billion, down 13%, while car chips grew 52% to US$6.0 billion. Qualcomm also says it returned US$11.67 billion to shareholders through buybacks and dividends.

• Phone chips (-26%)US$5.14bn
• Car chips (+89%)US$1.99bn
• Smart devices (+4%)US$1.89bn
• Licensing (-7%)US$1.30bn

Quarter ended 27 September 2026. Source: Qualcomm fourth-quarter results

A US$5bn data-centre promise, one year out

Chief executive Cristiano Amon said fiscal 2027 “marks the start of our non-handset revenue inflection, including the ramp of our Data Center business”. He expects revenue outside phones to grow more than 60% and repeated a target of US$5 billion in data-centre revenue next year.

That is a large goal for a business that is only now appearing in Qualcomm’s forecasts. The guide for October to December, the first to include data centres, is US$10.4 billion to US$11.2 billion in revenue. Investing.com notes the midpoint is above analysts’ estimates, while the profit range sits just under them. Much of the hope rests on a long-term chip deal with Amazon, announced in September.

The open question is competition. Data-centre chips are where Nvidia, and increasingly AMD, whose own AI chip sales nearly doubled, already lead, and the big cloud companies design chips of their own. Qualcomm has a target and a big customer. It does not yet have a track record in this market.

Why your next Android phone may cost more

The most useful line for most readers is about costs. Qualcomm says it faces a “broad-based increase in input costs” across chip factories, packaging, memory and other materials, so it is raising its own prices. It expects the full benefit only in the second half of fiscal 2027.

In plain terms, phone makers will pay more for Snapdragon chips, on top of memory that already costs more. Apple warned of the same memory squeeze this week, and SK hynix expects the shortage to last until 2030. Our reading is that higher-end Android phones in 2027 may cost more, or offer less for the same price. That is analysis, not a forecast. If you planned to upgrade soon, current deals may be worth a look.

Many readers also search for Qualcomm revenue from Apple. The release does not give a figure. It says only that Qualcomm renewed long-term licence deals with Apple, Huawei and Transsion, which protects patent income for years. If you follow Qualcomm stock, this is not investment advice.

On balance, a slow handover from phones to cars and servers

There is real strength here. A car business near US$2 billion a quarter, growing almost 90%, is no side project. Renewed licence deals with three big phone makers add stability.

The weakness is just as real. Phones still bring in about half of Qualcomm’s sales, and that half shrank by a quarter in a year. Rising costs will squeeze profits before higher prices help.

On balance, we read this as a company in the middle of a handover, not one in trouble. The likelier risk is timing: whether new businesses grow fast enough while the old one shrinks.

The next test comes in early 2027, with the next Qualcomm earnings report, the first to include data-centre sales. If that line starts to fill in, the US$5 billion goal will look like a plan. If it doesn’t, phones will set the story again.