Qualcomm's car chip sales grow 89 percent as phone chips shrink

What happened

Qualcomm reported on Wednesday 4 November that its fiscal 2026 revenue was $43.1 billion, 3 percent less than a year earlier, as car chips grew and phone chips shrank. ^{[1, 2]}

Fourth-quarter revenue was $10.3 billion, down 8 percent from $11.3 billion, the company reported in its results release. Its annual report, filed the same day, puts net income for the year at $13.6 billion, up 146 percent. Most of that rise came from a $5.7 billion tax benefit, the release of a reserve held against tax assets the company now expects to use. ^{[1, 2]}

Why it matters

Revenue from phone chips was $5.1 billion in the quarter, down 26 percent from $7.0 billion, while car chips reached $1.99 billion, up 89 percent, what the company called its first $2 billion quarter there. With connected devices at $1.9 billion, up 4 percent, cars and devices made up 43 percent of chip revenue, against 29 percent a year earlier, by the desk's arithmetic. ^[1]

Phones, Apple and data centers

The annual report ties the phone decline to lower shipments to major phone makers, which cut their stocks of chips as memory supply ran short and memory prices rose. ^[2]

The annual report says Qualcomm expects Apple to 'primarily use its own internally developed modem products' from now on, with 'a significant negative impact' on chip revenue. Chief executive Cristiano Amon told Reuters that the forecast for the current quarter includes no further sales to Apple. Apple did renew its long-term patent licence, as did Huawei and Transsion, the release said. ^{[1, 2, 3]}

Amon said in the release that non-phone revenue is projected to grow more than 60 percent in fiscal 2027, and he repeated a $5 billion data center revenue target for that year. The annual report counts $476 million of revenue for fiscal 2026 across the units outside its main segments, data centers among them. From the first quarter of fiscal 2027, data centers will be reported inside the chip segment. ^{[1, 2]}

The press read one figure two ways. Reuters reported that Qualcomm expects $650 million in data center sales for the first fiscal quarter; CNBC reported that Amon said the company had $650 million in data center revenue during the past quarter. ^{[3, 4]}

What settles it next

For the first quarter of fiscal 2027, which ends in December, the company said it expects revenue of $10.4 billion to $11.2 billion. Of that, it expects $9.0 billion to $9.6 billion from chips, data centers included, and $1.3 billion to $1.5 billion from licensing. It said it is raising chip prices to meet higher supply costs and anticipates the full benefit in its chip margins in the second half of fiscal 2027. ^[1]

Who it reaches

Qualcomm (QCOM) is direct: the results and the annual report are its own. Apple (AAPL) is adjacent: the 10-K names it as a modem buyer moving to its own designs, and its licence was renewed. ^{[1, 2]}

Amazon (AMZN) is adjacent: the release announced a multi-generational product collaboration with it for AI data centers. Reuters reported that a September agreement lets Amazon buy up to $60 billion of Qualcomm's AI chips and related data center products. ^{[1, 3]}