Memory Constraints Stall Handset Production
Global memory shortages are expected to constrain mobile phone sales for some time, dampening demand for major smartphone chip designers including Qualcomm and Arm Holdings, executives and analysts said after both companies reported results that fell short of investor expectations.
Qualcomm, one of the world’s largest suppliers of smartphone processors, said weaker orders reflected customers’ inability to secure sufficient memory supplies to ship complete devices. As a result, the company forecast current-quarter revenue below market estimates, triggering a sharp selloff in its shares.
“Industry-wide memory shortage and price increases are likely to define the overall scale of the handset industry through the fiscal year,” Qualcomm CEO Cristiano Amon told analysts on an earnings call.
Arm Warns of Royalty Impact
Arm, whose chip architecture underpins a large share of global smartphone processors, warned that stalled handset shipments could weigh on its royalty revenues. Chief Financial Officer Jason Child said memory shortages could reduce Arm’s royalty income by up to 2% over the next year.
Shares in both companies fell sharply in after-hours trading, with Qualcomm down nearly 10% and Arm sliding about 8%, as investors reacted to signs that the supply constraints may persist longer than previously expected.
Executives said the memory shortage could extend through the current fiscal year, with some analysts forecasting tight supply conditions lasting into 2027. Morningstar and J.P. Morgan have both warned that memory supply pressures could remain elevated for several years.
Broader Electronics Impact, Data Centre Pivot
According to Counterpoint Research, global shipments of advanced smartphone chips are expected to decline 7% in 2026, partly due to rising memory prices. The cost pressures are also dimming the outlook for a wider range of consumer electronics.
Analysts said Qualcomm’s results reflected broader industry challenges rather than company-specific weaknesses. “The company is dealing with the same memory constraints affecting parts of the smartphone supply chain,” said eToro analyst Zavier Wong.
Both Qualcomm and Arm are attempting to reduce their reliance on smartphone chips by expanding into higher-growth areas such as data centres. Qualcomm said the memory shortage is unlikely to affect its planned rollout of AI chips for data centres later this year, with meaningful revenue expected from fiscal 2027.
