SAN FRANCISCO, February 5, 2026, 10:01 (PST)
- Qualcomm warned a global memory chip squeeze is weighing on phone makers and guided second-quarter revenue and profit below estimates
- Arm flagged a possible hit to future royalty revenue even as it forecast fourth-quarter revenue above Wall Street expectations
- Analysts and executives say the memory crunch could linger into 2027, pressuring smartphone shipments and parts of consumer electronics
Qualcomm and Arm Holdings shares fell after both companies pointed to a global shortage of memory chips that is starting to bite the smartphone supply chain, softening demand for their core products.
The issue is not chip design. It is parts. Phone makers need memory chips to ship complete devices, and executives said tight supplies and higher prices are leaving customers cautious.
That matters now because memory sits inside almost every gadget people buy, and the current squeeze is forcing device makers to rethink build plans for 2026. Some analysts expect the shortage to last well beyond a typical quarterly wobble.
Qualcomm late on Wednesday forecast second-quarter revenue of $10.2 billion to $11 billion and adjusted earnings of $2.45 to $2.65 a share, both below estimates, and CEO Cristiano Amon said the shortfall came down to one thing: “I just wish we had more memory.” Reuters
The San Diego-based chip supplier still beat Wall Street estimates for the quarter ended Dec. 28, posting revenue of $12.25 billion and adjusted profit of $3.50 a share. But it said smartphone chip sales are being held back as original equipment manufacturers (OEMs) — the phone makers — struggle to secure enough memory supply, especially among customers in China.
Arm, whose designs underpin many smartphone processors, reported total revenue of $1.24 billion for its fiscal third quarter and forecast fourth-quarter revenue of $1.47 billion, but investors focused on a miss in licensing sales — the upfront fees customers pay for access to its technology. “A weak licensing revenue today will likely result in weaker future royalties revenue,” Summit Insights analyst Kinngai Chan wrote. Reuters
Arm CFO Jason Child said royalty revenue — the per-chip fee Arm collects when a customer ships a product using its designs — could take as much as a 2% hit over the next year if the memory shortage constrains phone shipments. Qualcomm executives said the shortage could last through the current fiscal year and into 2027, with Morningstar and J.P. Morgan also expecting tight supply through 2027. Reuters
Investors took the warning as a broad read-through for consumer tech. Qualcomm shares fell about 9% after hours on Wednesday, while Arm dropped roughly 8%, following results that traders said did not fully price in the memory problem. Economictimes
But there is a cushion at the top end of the market. Qualcomm has said its chips skew toward higher-priced Android phones, and analysts at Bernstein said demand for chips looks firmer in premium models as OEMs steer scarce components into their best-margin devices. A longer squeeze, though, risks sharper cuts in mid- to low-end phones where buyers are more sensitive to price jumps.
Both companies are trying to lean harder into data centers, where AI is driving demand for compute. Amon said he does not expect the memory crunch to derail Qualcomm’s planned rollout of AI chips for data centers in the second half of this year, and Arm said demand for its power-efficient designs is rising in AI server chips, including at companies such as Nvidia.
Arm’s quarterly update, also covered by Irish broadcaster RTE, highlighted the same tension: solid revenue growth alongside concerns that licensing and future royalty streams could wobble if smartphone shipments stay capped by memory supply. Rte
