Memory component shortages are constraining the ability of phone makers to ship finished devices, a dynamic that executives and analysts say is weighing on chip industry participants including Qualcomm and Arm. Both companies reported results that failed to meet investor expectations, with industry-wide memory constraints cited as a key factor.
Among leading smartphone chip designers, Qualcomm is contending with subdued order activity as its customers are unable to secure memory allocations needed to ship complete products. That shortfall has led the company to forecast revenue for the current quarter below market expectations.
On a post-earnings call, Qualcomm Chief Executive Cristiano Amon described the impact of memory on the handset market, saying:
"Industry-wide memory shortage and price increases are likely to define the overall scale of the handset industry through the fiscal year,"
"Unfortunately, I think that the whole sector is impacted by memory."
Arm, which designs the processor architecture used widely across modern smartphones - including chips from Qualcomm - warned that a slowdown in mobile processor sales is likely to weigh on its royalty receipts. Arm Chief Financial Officer Jason Child told analysts after the company's results that royalty revenues over the next year could be reduced by as much as 2% as the memory shortage curtails cell phone supply.
The market reaction was swift: Qualcomm shares fell nearly 10% in after-hours trading, while Arm's stock declined about 8%.
Company executives cautioned that the memory supply tightness may extend. Qualcomm leaders said the shortage could persist through the current fiscal year, potentially keeping supply pressure in place into 2027. Other analyst groups cited in company commentary similarly expect the tightness to last into 2027.
Industry data cited in the companies' discussion point to a softening in smartphone chip demand next year. Global shipments of advanced smartphone chips are forecast to drop 7% in 2026, with rising memory prices identified as a partial driver of that decline. The jump in memory costs is also expected to broadly dim the outlook for consumer electronics more generally.
An external market analyst offered context on Qualcomm's results, arguing they reflect sector-wide trends rather than company-specific failings. Zavier Wong, an analyst at a market research firm, said:
"The results largely reflect broader industry trends rather than Qualcomm-specific issues. The company is dealing with the same memory constraints affecting parts of the smartphone supply chain."
Both Qualcomm and Arm have been working to lower their reliance on mobile phone chip markets by expanding into the data center segment, which is viewed as higher growth and higher margin. Qualcomm's CEO said the company does not expect the global memory shortage to impede its planned rollout of AI chips for data centers. Qualcomm expects to launch those AI-focused chips in the second half of this year, with management forecasting meaningful revenue contribution in the firm's fiscal 2027.
Implications
The combination of constrained memory supply and rising prices is pressuring handset builds, depressing mobile processor sales and trimming royalty-linked revenues. That dynamic is affecting smartphone supply chains, chip designers, and the broader consumer electronics sector.