Qualcomm chip prices are going up on September 1, CEO Cristiano Amon said Wednesday, according to CNBC. The company disclosed the move alongside a sharp drop in its handset business, which matters because Qualcomm’s processors sit inside many Android phones and higher component costs have a habit of finding their way into device prices or spec sheets.
Amon said Qualcomm’s product prices “are going to go up,” CNBC reported. Qualcomm did not specify the size of the increase in the earnings comments cited by CNBC. The Verge reported last week that the increases had been rumored to land in the double-digit percentage range.
Why is Qualcomm raising chip prices?
Qualcomm pointed to the memory market. In its quarterly earnings presentation, the company said handset revenue fell 20 percent from a year earlier, its lowest level since 2021, and attributed the decline to “unprecedented increases in memory pricing and supply constraints.”
Memory is not the same part as Qualcomm’s application processor or modem, but it is still part of the same device budget. If RAM and storage get more expensive or harder to source, phone makers have less room to absorb price increases elsewhere. Qualcomm’s answer, according to Amon’s comments, is to raise its own prices rather than let the hit sit entirely inside its margins.
The pressure is not confined to phones. The same memory crunch has been pushing up costs across other electronics categories, including game consoles, laptops, and Raspberry Pi boards, according to The Verge’s reporting. Qualcomm’s handset slide is one more datapoint in a supply chain that is doing what supply chains do best: turning one shortage into a pricing problem for several markets at once.
Will Qualcomm chip prices make phones more expensive?
Qualcomm has not announced retail phone price changes, and handset makers set the final prices consumers see. The practical risk is straightforward: if Qualcomm charges manufacturers more for processors, manufacturers can raise phone prices, cut features, accept lower margins, or use older chips.
Qualcomm EVP, CFO, and COO Akash Palkhiwala said some original equipment manufacturers are already starting to use “prior generation” Qualcomm chips in response to higher component costs. That is the boring version of a downgrade: the phone may still ship, but the silicon inside may be last year’s part because this year’s bill of materials got ugly.
What happens with Apple and Qualcomm?
Qualcomm also warned that revenue tied to Apple products is expected to decline faster. The company said its modem share for the next iPhone launch is expected to be “materially lower.” Qualcomm suggested on its earnings call that growth in other businesses would offset that pressure.
The company is trying to reduce its dependence on phones. Qualcomm said Wednesday that phones will soon account for only half of its revenue, and that handset revenue will fall to one-third of the total by 2029 as its data center and automotive businesses grow.
Automotive is one of the places Qualcomm wants that growth to come from. Reuters reported Wednesday that Qualcomm reached a 10-year agreement to supply chips for BMW’s future vehicle platforms. That deal does not fix phone buyers’ September problem, but it shows where Qualcomm wants investors to look while its handset business absorbs weaker revenue, higher memory costs, and a smaller Apple modem role.
This story draws on original reporting from The Verge.
