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Memory shortages are constraining smartphone sales and weighing on major chip companies including Qualcomm and Arm Holdings, according to executives and analysts who spoke on Wednesday following disappointing quarterly results from both firms. The memory chip shortage is expected to persist through 2027, limiting the ability of smartphone manufacturers to secure sufficient components to ship complete devices and dampening revenue forecasts across the semiconductor industry.
Shares of Qualcomm fell more than 9 percent in early morning trading on Thursday, while Arm Holdings saw its stock decline 3 percent. Both companies reported results that failed to meet investor expectations as memory supply constraints continue to ripple through the mobile device ecosystem.
Memory Shortage Impact on Smartphone Chip Demand
Qualcomm, one of the world’s largest smartphone chip designers, is experiencing weaker orders as customers struggle to obtain memory allocations needed to complete their products. The company forecast current quarter revenue below market estimates, reflecting the broader supply chain challenges.
“Industry-wide memory shortage and price increases are likely to define the overall scale of the handset industry through the fiscal year,” Qualcomm CEO Cristiano Amon said during a post-earnings call. He added that the entire sector is being impacted by memory constraints.
Arm Holdings Faces Royalty Revenue Pressure
Arm Holdings, which designs the architecture underlying a significant portion of global smartphone chips including those from Qualcomm, faces dampened royalty revenues as mobile processor sales stall. Chief Financial Officer Jason Child told analysts that the company’s royalty revenues over the next year could be reduced by as much as 2 percent due to memory shortages affecting cell phone supply.
The memory shortage could extend through Qualcomm’s current fiscal year, potentially dragging supply pressures into 2027, according to company executives. In December, Morningstar analysts projected memory supply tightness would persist well into 2027, with J.P. Morgan analysts echoing similar expectations.
Broader Industry Implications
Global shipments of advanced smartphone chips are expected to decline 7 percent in 2026, partially due to rising memory prices, according to data from Counterpoint Research. Additionally, J.P. Morgan analysts forecast a double-digit percentage decline in global smartphone shipments as rising memory costs curb demand in the mid to low-end device segment.
However, the surging memory prices are expected to broadly dim the outlook for consumer electronics beyond smartphones. “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,” said eToro analyst Zavier Wong.
Companies Diversify Beyond Mobile Phone Chips
Meanwhile, both Qualcomm and Arm have been working to reduce their dependence on the mobile phone chip market by venturing into the high-growth, high-margin data center market. Qualcomm CEO Amon told Reuters on Wednesday that he does not expect the global memory shortage to affect his company’s rollout of AI chips for data centers.
Qualcomm expects to launch those data center chips in the second half of this year, with meaningful revenue anticipated in the firm’s fiscal 2027. In contrast, Bernstein analysts noted that underlying chip demand appears to remain strong and Qualcomm’s higher-end smartphone segment may be relatively more insulated from supply constraints.
The analysts added that original equipment manufacturers could direct the impact of scarce chip supply toward more profitable product lines. Nevertheless, the memory chip shortage remains a significant headwind for the smartphone industry, with industry observers continuing to monitor supply chain developments throughout the remainder of 2027.
