Memory Shortage Hits Smartphone Chips, Pressures Qualcomm and Arm

A global shortage of memory components is weighing heavily on the smartphone industry, putting pressure on major chip companies such as Qualcomm and Arm Holdings. Industry executives and analysts say limited availability and rising prices of memory are slowing smartphone production, as manufacturers struggle to secure enough components to ship complete devices.

As a result, demand for smartphone processors has weakened, affecting sales and near-term outlooks for leading chip designers. Qualcomm recently reported quarterly results that fell short of investor expectations and issued a revenue forecast for the current quarter that was below market estimates. The company explained that several customers are unable to place strong orders because memory shortages are preventing them from finishing and selling their smartphones.

Qualcomm CEO Cristiano Amon said that the memory supply crunch, combined with higher prices, is likely to shape the overall size of the handset market throughout the fiscal year. He noted that the issue is affecting the entire sector rather than one company or region. \

Qualcomm executives also warned that memory supply constraints could continue through the current fiscal year and may extend into 2027. Reflecting investor concerns, Qualcomm shares fell nearly 10 per cent in after-hours trading following the results announcement.

Arm Holdings is facing similar challenges. Arm designs the core architecture used in a large share of smartphone processors worldwide, including many chips made by Qualcomm. With smartphone chip sales slowing, Arm expects pressure on its royalty income.

The company’s finance chief said royalty revenue over the next year could decline by up to 2 per cent due to reduced smartphone shipments linked to memory shortages. Arm’s shares dropped about 8 per cent after its earnings update.

Market analysts expect the memory supply tightness to last longer than initially anticipated. Several research firms now forecast that shortages could continue well into 2027. Data from Counterpoint Research shows that global shipments of advanced smartphone chips are expected to fall by 7 per cent in 2026, partly because of rising memory costs. Higher memory prices are also clouding the outlook for the broader consumer electronics market.

Despite near-term challenges in smartphones, both Qualcomm and Arm are working to reduce their reliance on mobile chips by expanding into faster-growing areas such as data centres. Qualcomm has said that the ongoing memory shortage is not expected to affect its planned rollout of artificial intelligence chips for data centres, with meaningful revenue anticipated from fiscal 2027.

Source: The Economic Times