---
title: "Qualcomm's handset chip sales fell 26% as AI took the memory; its data-center push brought $650 million"
description: "Handset chips fell 26 percent in a quarter because AI data centers took the memory supply. The same buildout is Qualcomm's contracted second act, and tonight's guidance counts it for the first time."
publisher: "The Inference"
section: "Chips"
published: 2026-11-04T22:20:10.078Z
modified: 2026-11-04T22:20:10.078Z
canonical: https://theinference.org/article/qualcomm-s-handset-chip-sales-fell-26-as-ai-took-the-memory-its-data-center-push-brought-650-million
language: en
keywords: "Qualcomm, Earnings, Semiconductors, Memory, AI Data Centers, Smartphones"
---

# Qualcomm's handset chip sales fell 26% as AI took the memory; its data-center push brought $650 million

> Handset chips fell 26 percent in a quarter because AI data centers took the memory supply. The same buildout is Qualcomm's contracted second act, and tonight's guidance counts it for the first time.

[Qualcomm](https://theinference.org/markets/companies/qualcomm), the largest maker of smartphone processors, [reported tonight](https://www.sec.gov/Archives/edgar/data/804328/000080432826000127/0000804328-26-000127-index.htm) that handset chip revenue fell 26 percent to $5.14 billion in its September quarter, automotive chips rose 89 percent to a first $2 billion quarter, and total revenue fell 8 percent to $10.3 billion [1] [2]. From the December quarter, the company's outlook includes data-center revenue for the first time, alongside a repeated target of $5 billion from data centers in fiscal 2027 [1].

Both halves of tonight's report trace to the same buyers: the cloud companies building AI data centers took memory supply away from phone makers [4], and they are hiring Qualcomm to design chips for those data centers [8]. Our October piece sized the climb: [Qualcomm must grow data-center revenue sixteenfold in a year to replace Apple](https://theinference.org/article/qualcomm-must-grow-data-center-revenue-sixteenfold-in-a-year-to-replace-apple).

Investors had priced in doubt all year, leaving the stock up just 1.3 percent before tonight [2]. It rose about 4 percent on the release [2], then [dropped 5 percent once the profit forecast landed](https://www.cnbc.com/2026/11/04/qualcomm-qcom-earnings-report-q4-2026.html) [3]. Both moves fit the report: [the sales guide beat estimates, the profit guide missed](https://www.bloomberg.com/news/articles/2026-11-04/qualcomm-s-push-into-new-markets-helps-make-up-for-phone-slump) [2] [3].

## AI builders took the memory, and the phones broke

The handset decline starts in the memory market. Samsung, [SK hynix](https://theinference.org/markets/companies/sk-hynix) and [Micron](https://theinference.org/markets/companies/micron) make the high-bandwidth memory AI accelerators need on the same DRAM lines that feed phones, [under multiyear contracts with the cloud builders](https://theinference.org/article/micron-put-ceilings-on-its-own-boom-26-contracts-cap-a-third-of-revenue), and [memory prices have more than quadrupled in a year](https://www.fastcompany.com/91624656/ais-memory-chip-crunch-is-crushing-the-smartphone-market) [4]. Samsung has reportedly [asked suppliers to cut phone production by up to 30 percent this quarter](https://finance.yahoo.com/technology/articles/samsung-reportedly-cutting-smartphone-production-105253584.html) [5]. September-quarter smartphone shipments were the weakest for that season since 2012 [6].

Qualcomm raised its own chip prices in September [3]; the handset line still fell harder than anything else it sells [1]. The chain ends with the buyer: phones cost more and the cheapest models are disappearing [4].

*Chart: **Handsets lost a quarter of their revenue in a year; automotive nearly doubled** Range chart comparing Qualcomm's chip revenue from handsets, automotive and internet-of-things between the September 2025 and September 2026 quarters, with handsets falling by a quarter and automotive nearly doubling*

*Revenue of QCT, Qualcomm's chip segment, by end market; fiscal fourth quarters ended September 2025 and September 2026, in billions of dollars, per the company's results release of November 4, 2026. [1]*

## The AI side of the buildout is already under contract

The [Amazon](https://theinference.org/markets/companies/amazon) collaboration, [announced in September](https://www.morningstar.com/news/pr-newswire/20260908la42187/qualcomm-announces-multi-generational-product-collaboration-with-amazon-to-build-next-generation-ai-data-center-infrastructure), covers custom inference chips and optical interconnects, and its warrant vests only as Amazon places real orders, up to $60 billion of them through 2036 [7] [8]. [Meta](https://theinference.org/markets/companies/meta) plans to use Qualcomm's C1000 server processor in its next-generation fleet [7]. Earlier today, [SpaceX](https://theinference.org/markets/companies/spacex) [picked Qualcomm's Dragonwing radio platforms for the terrestrial half of a planned nationwide 5G network](https://finance.yahoo.com/technology/articles/spacex-selects-qualcomm-accelerate-starlink-133500564.html), tens of thousands of sites from 2027 [9] [10].

Data centers already produced about $650 million of revenue last quarter, mostly custom silicon and connectivity work [3]. Chief Executive Cristiano Amon named the limit: "We don't have a demand issue; it's a supply issue" [3]. Licensing revenue held flat for the year at $5.6 billion, after Qualcomm renewed long-term agreements with [Apple](https://theinference.org/markets/companies/apple), [Huawei](https://theinference.org/markets/companies/huawei) and Transsion, three phone makers [1] [3].

## Margins are the constraint now

The December-quarter revenue guide sat above the average analyst estimate; the profit guide sat below it [2] [3]. Qualcomm says its price increases will not fully offset industry-wide input costs in its chip gross margins until the second half of fiscal 2027 [1]. It returned $11.7 billion to shareholders in the fiscal year just ended, more than its operations generated in cash [1].

*Chart: **Quarterly revenue peaked in the December 2025 quarter and has fallen year over year since** Line chart of Qualcomm's quarterly revenue from the September 2023 quarter through the September 2026 quarter, peaking in the December 2025 quarter and declining since*

*Qualcomm GAAP revenue by calendar quarter, in billions of dollars; quarters through June 2026 per its SEC filings, September 2026 quarter per the results release of November 4, 2026. [11][1]*

The December-quarter report will count data center inside Qualcomm's segment guidance for the first time [1]. That number, and the margin on it, will show whether the contracted buildout ships fast enough to replace the phones.

## Takeaway

AI data centers took the DRAM phones need, cutting Qualcomm's handset chip revenue 26 percent, while its data-center work booked $650 million last quarter and enters guidance from December.

## Sources

1. [Qualcomm Incorporated, Form 8-K with Exhibit 99.1, results for the fourth quarter and fiscal year ended 27 September 2026, 4 November 2026](https://www.sec.gov/Archives/edgar/data/804328/000080432826000127/0000804328-26-000127-index.htm)
2. [Bloomberg, Ian King, Qualcomm Sales Outlook Tops Estimates With Growth in Vehicles, Data Centers, 4 November 2026](https://www.bloomberg.com/news/articles/2026-11-04/qualcomm-s-push-into-new-markets-helps-make-up-for-phone-slump)
3. [CNBC, Kif Leswing, Qualcomm stock drops 5% on weak earnings forecast as memory shortage weighs on smartphone sales, 4 November 2026](https://www.cnbc.com/2026/11/04/qualcomm-qcom-earnings-report-q4-2026.html)
4. [Fast Company, Mark Sullivan, AI's memory chip crunch is crushing the smartphone market, 16 October 2026](https://www.fastcompany.com/91624656/ais-memory-chip-crunch-is-crushing-the-smartphone-market)
5. [Yahoo News, Jay Bonggolto, Samsung is reportedly cutting smartphone production as memory costs soar, 8 October 2026](https://finance.yahoo.com/technology/articles/samsung-reportedly-cutting-smartphone-production-105253584.html)
6. [India Today, Krishna Goswami, Global smartphone shipments hit 14-year low as memory chip shortage drives up phone prices, 13 October 2026](https://www.indiatoday.in/technology/news/story/global-smartphone-shipments-hit-14-year-low-as-memory-chip-shortage-drives-up-phone-prices-3016329-2026-10-13)
7. [TechTarget, Shane Snider, Amazon's $60B Qualcomm deal expands AI inference hardware, 9 September 2026](https://www.techtarget.com/it-infrastructure/news/366650224/Amazons-60B-Qualcomm-deal-expands-AI-inference-hardware)
8. [Qualcomm press release via PR Newswire/Morningstar, Qualcomm Announces Multi-Generational Product Collaboration with Amazon to Build Next-Generation AI Data Center Infrastructure, 8 September 2026](https://www.morningstar.com/news/pr-newswire/20260908la42187/qualcomm-announces-multi-generational-product-collaboration-with-amazon-to-build-next-generation-ai-data-center-infrastructure)
9. [Via Satellite, Rachel Jewett, SpaceX Strikes Deal with Qualcomm for Terrestrial Component of Starlink Mobile Network, 4 November 2026](https://www.satellitetoday.com/connectivity/2026/11/04/spacex-strikes-deal-with-qualcomm-for-terrestrial-component-of-starlink-mobile-network/)
10. [Qualcomm press release via Business Wire, SpaceX Selects Qualcomm to Accelerate Starlink Mobile's Nationwide 5G Network, 4 November 2026](https://finance.yahoo.com/technology/articles/spacex-selects-qualcomm-accelerate-starlink-133500564.html)
11. [Qualcomm, quarterly revenue from its SEC filings, retrieved 4 November 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000804328)


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Qualcomm's handset chip sales fell 26% as AI took the memory; its data-center push brought $650 million — The Inference. Canonical: https://theinference.org/article/qualcomm-s-handset-chip-sales-fell-26-as-ai-took-the-memory-its-data-center-push-brought-650-million