Qualcomm has issued a warning that soaring memory prices will slow the smartphone industry, causing investors to react nervously and push the company’s share price down by 11 percent. During the Q1 2026 earnings call, CEO Cristiano Amon announced a company record revenue of $12. 3 billion, attributing the strong results to robust sales of premium smartphones and increased demand for smart glasses, automotive, and Internet of Things products. However, he quickly turned cautious, stating, “In the coming quarters, the handset industry will be constrained by the availability and pricing of memory, particularly DRAM. ” He explained that these constraints arise because memory manufacturers are prioritizing memory production for AI datacenters, cutting back on other types of memory supply. This imbalance in supply and demand has caused DRAM prices to surge. Amon noted that “several” handset manufacturers, especially in China, are now “taking a cautious approach in reducing their chipset inventory. ” CFO Akash Palkhiwala added that this cautious stance means Qualcomm’s smartphone clients have “scaled-back expectations for build plans, ” resulting in fewer devices being produced and consequently lower sales for Qualcomm. The situation isn’t entirely bleak, as the caution among smartphone makers doesn’t signal a decrease in device demand. Instead, Amon explained, it reflects their belief that memory availability will be limited, prompting them to temper their production goals. The CEO remains optimistic that Qualcomm will not face long-term struggles in this market. Nevertheless, the immediate impact looks challenging, with Qualcomm forecasting Q2 revenue between $10. 2 billion and $11 billion, compared to $11 billion in Q2 last year. Of last year’s Q2 revenue, $6. 9 billion came from handset chip sales, whereas this year the company anticipates that figure dropping to $6 billion. In related news, Qualcomm’s CEO received a 15% pay increase despite profits falling 45%.

The company also recently acquired Ventana, a RISC-based Arm alternative, while facing criticism from makers upset by Qualcomm tightening controls on Arduino. Additionally, Qualcomm is betting on cloud inferencing, though Arm argues cloud infrastructure can’t fully support it indefinitely. While AI-related challenges are impacting Qualcomm’s smartphone sector, the company is trying to capitalize on the AI boom with its own inferencing chips. Amon revealed that Qualcomm has begun shipping products to Humane, its sole confirmed customer for this silicon, and is assisting them with running third-party workloads. “You would imagine that a company of our size would be engaged in conversations with some of the largest hyperscalers and cloud service providers, ” Amon remarked, adding, “We’re gaining good traction. ” Revenue from AI silicon is expected to start arriving next year. Amon also highlighted promising opportunities in robotics, automotive, and patent licensing, expressing hope that these areas will help Qualcomm diversify and increase revenue, aiming to reduce dependence on smartphones by 2029. Currently, Qualcomm still relies heavily on smartphone revenue, and investors reacted to the latest news by valuing shares around $134 each, down from over $150 earlier in the day. ®