Qualcomm memory chip shortage pressures the chipmaker’s fiscal outlook as it navigates slowing smartphone demand and intense competition in data centers. The company reported mixed results for fiscal Q2 2026, ending March 29, with overall revenue declining 3 percent year-on-year to $10.6 billion, though net income grew 162 percent to $7.4 billion, boosted by a one-time tax benefit of $5.7 billion.
The Qualcomm memory chip shortage stems from an industry-wide memory crunch driven by artificial intelligence hardware demand. This shortage forced smartphone manufacturers to cut production, reducing orders for Snapdragon processors. Counterpoint Research data shows the memory crisis contributed to a 6 percent year-on-year decline in smartphone shipments during calendar Q1 2026.
Mobile Revenue Decline and Forecast
Phone-related revenue fell 13 percent to $6 billion in fiscal Q2, reflecting the broader market slowdown. Looking ahead, Qualcomm forecast fiscal Q3 revenue between $9.2 billion and $10.0 billion, falling short of LSEG analyst estimates of $10.2 billion. The company projected Q3 chip segment revenue of $7.9 billion to $8.5 billion.
CEO Cristiano Amon said the company is managing through a challenging memory environment. He indicated that China-based handset revenues are expected to reach bottom in fiscal Q3 before recovering in the following quarter, suggesting some stabilization ahead.
Growth in Automotive and IoT Segments
Not all segments faced headwinds. Automotive sales increased 38 percent to $1.3 billion, marking Qualcomm’s strongest growth area. The Internet of Things segment grew 9 percent to $1.7 billion, providing a counterbalance to smartphone market weakness. Overall QCT chip segment revenue declined 4 percent to $9.1 billion.
Data Center Competition and Partnerships
Qualcomm continues pursuing the data center market, which represents the chip industry’s fastest-growing segment. However, the company remains significantly behind Nvidia in this category. Amon disclosed that a major hyperscale company is on track to adopt Qualcomm’s data center chips later in 2026.
The company’s artificial intelligence ambitions include a partnership established in 2025 with Humain, a Saudi government-backed AI startup. This collaboration underscores Qualcomm’s effort to strengthen its position in the rapidly expanding AI and data center sectors amid ongoing chip market competition.
The Qualcomm memory chip shortage reflects broader industry dynamics as manufacturers balance AI investment demands with near-term smartphone market softness.
