Qualcomm reported an 8% year-on-year decline in fourth-quarter revenue to $10.32 billion, as weakness in its smartphone chip business offset strong growth in automotive sales. Adjusted earnings stood at $2.17 per share, marginally above analysts' estimates of $2.16. (Sources: CNBC, WSJ, Reuters)
Qualcomm's handset business remained the biggest drag on its performance, with revenue falling 26% year-on-year to $5.14 billion. Higher memory costs and sluggish smartphone demand weighed on sales, while declining Apple-related revenue added to the pressure.
Qualcomm's automotive business emerged as a bright spot, with revenue jumping 89% year-on-year to a record $1.99 billion. Internet of Things revenue also increased 4% to $1.89 billion, highlighting the company's efforts to diversify beyond smartphones.
Qualcomm expects chip-design operating margins to decline to 20%-22% in the first quarter of fiscal 2027, compared with 24% in the September quarter. Rising costs across wafer fabrication, assembly, testing, advanced packaging and memory are squeezing profitability. The company is raising product prices, but expects the full earnings benefit to materialise only in the second half of fiscal 2027.
Qualcomm is accelerating its expansion into AI data centres, automotive and connected devices to reduce its dependence on smartphones. The company reiterated its $5 billion fiscal 2027 data-centre revenue target and expects non-handset revenue to grow more than 60% year-on-year. A multi-year collaboration with Amazon for AI data-centre products adds to its growth ambitions.