NuAxiSemiconductor trade intelligence

Qualcomm Sees Flat Smartphone Market, Strong Data Center Growth

What happened

On Nov. 4 local time, during Qualcomm's fiscal fourth-quarter 2026 earnings call, CFO Akash Palkhiwala said global smartphone handset shipments would decline by a percentage in the low-to-mid teens in 2026 from a year earlier, adding "As we move into next year, we expect the market to be flat to slightly down," with the company adopting conservative assumptions given market uncertainty. The source states the cause: memory supply constraints and rising component prices are the main reasons for the smartphone market contraction — smartphone manufacturers have reduced production plans, while higher handset prices have weakened consumer demand. Despite the challenging market, Qualcomm expressed confidence in improving performance in China's smartphone market and strengthening its position in premium handsets; Palkhiwala said the June quarter was the bottom for China Android and Qualcomm handset chipset revenue, with revenue growing sequentially through the September and December quarters, and smartphone manufacturers holding very low chipset inventories, indicating current growth is driven by actual demand. Qualcomm is raising prices across its product portfolio to offset higher semiconductor manufacturing costs, with the increases expected to take effect from the second quarter of fiscal 2027. CEO Cristiano Amon said Qualcomm's chipset share in Samsung's flagship smartphones had historically been based on a 50% benchmark, but "70% or more has become the new baseline" for current and next-generation Galaxy devices, and Qualcomm is expanding Snapdragon chipset adoption in Samsung wearables and smart glasses. As the mobile market slows, the AI data center business is expected to become Qualcomm's next growth engine; starting in fiscal 2027, smartphones are expected to account for less than 50% of Qualcomm's semiconductor division (QCT) revenue. Qualcomm expects to generate more than $650 million in revenue from custom ASICs supplied to hyperscalers, including Amazon, in the December quarter, with shipments expected to increase each quarter, reaching an annualized revenue run rate of $7 billion by the end of fiscal 2027; deliveries of optical connectivity solutions will also begin ramping up later in November. Meta is currently a customer for Qualcomm's Dragonfly C1000 server CPU; in June 2026, Qualcomm set data center revenue targets of $5 billion in 2027 and $15 billion in 2029.