Q3 FY2026 results miss on smartphone weakness
Qualcomm reported fiscal third-quarter 2026 revenue of $9.947 billion and net income of $2.002 billion for the period ending June 28, 2026, marking a 4% year-over-year decline in revenue and a 25% drop in net income. Smartphone chipset revenue totaled $5.086 billion, down 20% from a year earlier, as rising memory prices pushed up handset costs and reduced demand for the latest processors. Shares fell roughly 5% in after-hours trading following the July 29 earnings report. Management said chipset sales to Chinese smartphone makers likely bottomed in the June quarter and are expected to rebound with double-digit sequential growth starting in Q4.
Apple modem revenue set to crater
Qualcomm warned that revenue from Apple products is set to decline faster than previously expected, with CFO Akash Palkhiwala saying the company expects an acceleration in the step down of Apple product revenues. Qualcomm's contribution to the next iPhone is expected to be materially lower than the prior estimate of 20%, with December-quarter Apple modem revenue projected to fall roughly 50% from the September quarter. Annual sales to Apple are now expected to come in under $2 billion next year. Apple has been working on its own modems for years, a shift Qualcomm has long acknowledged.
Memory costs prompt broad chip price increases
Rising memory semiconductor prices were the primary driver behind weaker smartphone results, prompting Qualcomm to announce price increases across most of its product portfolio beginning September 1, 2026. CEO Cristiano Amon said the company will implement double-digit percentage price hikes and described the move as a pass-through of input-cost increases, not a margin expansion play. Palkhiwala said unprecedented memory price increases and supply constraints are expected to reduce fiscal 2026 QCT handset revenue by roughly 20% year-over-year. Amon argued that even double-digit increases are small compared to the memory bill of materials, and he expects Chinese smartphone sales to rebound as new agentic AI models launch.
Automotive business extends double-digit streak
Automotive chipset revenue rose 61% year-over-year to $1.588 billion in Q3, marking Qualcomm's 23rd consecutive quarter of double-digit annual growth in the segment. The company attributed the increase to broader adoption of the Snapdragon Digital Cockpit infotainment platform and the Snapdragon Ride ADAS platform, alongside a more favorable mix of high-value products. Qualcomm raised its automotive annualized revenue run-rate outlook to approximately $7 billion exiting fiscal 2026, up from $6 billion. The industrial design win pipeline now exceeds $7 billion, with more than $3.5 billion secured this fiscal year. Amon said next-generation silicon is driving an order-of-magnitude increase in processing capability per vehicle, allowing Qualcomm to win entire platforms rather than individual sockets.
Data center push anchors post-Apple strategy
Qualcomm forecast data center-related revenue of roughly $300 million in fiscal 2026, $5 billion in fiscal 2027, and more than $15 billion by fiscal 2029, anchored by the Dragonfly platform and custom ASIC programs. The company has begun wafer production for custom ASICs developed for two global hyperscale customers, with initial shipments expected to begin in Q1 of fiscal 2027 (ending December 2026). Qualcomm plans to begin mass production of its Dragonfly C1000 server CPU in the second half of 2028 under a multi-year, multi-generation agreement with Meta. The company also completed tape-out of its high-bandwidth compute (HBC) Gen 1 accelerator, targeting a mid-2027 launch. Even so, even at $15 billion in 2029, Qualcomm's datacenter footprint would remain modest versus the more than $16 billion in fiscal 2025 datacenter revenue won by AMD and Intel, and Nvidia, which is on track for over $250 billion in annual datacenter revenue.
India expansion and Snapdragon design wins
Qualcomm is expanding its Indian manufacturing partnership with Tata to produce automotive-grade modules, a program the company said it kicked off earlier this year, according to Nakul Duggal, EVP and group general manager for automotive, industrial and embedded IoT, and robotics at Qualcomm Technologies. Duggal said India is well positioned to become a global semiconductor and electronics manufacturing hub given supply-chain diversification trends and rising domestic demand. Separately, Qualcomm said Samsung's new Galaxy Z Fold 8 Ultra will feature the Snapdragon 8 Elite Gen 5 processor, while the Galaxy Watch9 and Galaxy Watch Ultra2 will use Snapdragon wearable platforms.
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