Qualcomm, Arm Hit by Memory Shortage, Stocks Tumble

Chipmakers Face Downturn from Memory Scarcity

Qualcomm and Arm Holdings are facing significant headwinds as a global memory shortage constrains smartphone production, leading to disappointing financial results and a subsequent drop in stock prices. Both companies, key players in the smartphone chip industry, have indicated that the supply issue is dampening sales and royalty revenues.

Industry-Wide Supply Chain Issues

The core problem stems from smartphone manufacturers being unable to secure enough memory components to complete their products. Qualcomm CEO Cristiano Amon stated the shortage is an industry-wide issue that will likely define the scale of the handset market for the fiscal year. Consequently, Qualcomm has forecasted current-quarter revenue below market estimates.

Economic and Market Repercussions

Following the announcements, Qualcomm’s shares fell nearly 10% in after-hours trading, while Arm Holdings saw an 8% decline. The impact is projected to be long-term, with executives and analysts from J.P. Morgan suggesting the memory supply tightness could persist into 2027. This prolonged shortage is also expected to dim the outlook for the broader consumer electronics sector.

Future Outlook and Diversification

In response, both Qualcomm and Arm are actively working to reduce their dependency on the mobile phone market. They are venturing into the high-growth data center market with new AI chips. Qualcomm expects to launch its data center chips in the second half of this year, with meaningful revenue anticipated in fiscal 2027.

FAQ

Q: Why did Qualcomm and Arm's stock prices fall?
A: Their stocks fell after they reported disappointing results and forecasts caused by a global memory shortage that is hurting smartphone chip sales.

Q: How long is the memory shortage expected to last?
A: Company executives and market analysts project that the memory supply shortage could continue into 2027.

Source: Investing.com