Qualcomm revenue falls 8 per cent in fourth quarter
Weakness in the smartphone chip segment offset strong growth in automotive sales as the company aims to diversify its revenue streams.
Qualcomm reported a year-on-year revenue decline of 8 per cent to $10.32 billion in its fourth quarter, according to the Economic Times. Adjusted earnings for the period reached $2.17 per share, slightly exceeding the $2.16 estimated by analysts.
The company's handset business saw revenue drop 26 per cent year-on-year to $5.14 billion. This decline was attributed to sluggish smartphone demand, higher memory costs, and a reduction in revenue related to Apple.
In contrast, the automotive division recorded a record $1.99 billion in revenue, an 89 per cent increase year-on-year. Internet of Things revenue also rose 4 per cent to $1.89 billion.
Qualcomm expects chip-design operating margins to fall to between 20 per cent and 22 per cent in the first quarter of fiscal 2027 from 24 per cent in the September quarter. The company noted that rising costs in memory, assembly, testing, advanced packaging, and wafer fabrication are impacting profitability.
To reduce reliance on smartphones, the company is expanding into connected devices, automotive, and AI data centres. Qualcomm reiterated a $5 billion revenue target for data centres in fiscal 2027 and expects non-handset revenue to grow by more than 60 per cent year-on-year.
The company is also working on a multi-year collaboration with Amazon for AI data-centre products. While Qualcomm is increasing product prices, it expects the full impact on earnings to appear in the second half of fiscal 2027.