Dive Brief:
- Chipmaker Qualcomm saw its fiscal third quarter revenue grow 10% to $10.4 billion over last year, driven in part by expansions into emerging markets, such as artificial intelligence-backed personal computers and smart glasses.
- The San Diego-based company reported 23% growth in its automotive and internet-connected segments, accounting for nearly $2.7 billion in revenue, as well as ongoing strength in chipset sales for smartphones. Net income grew 25% to $2.7 billion in the quarter versus last year.
- Qualcomm is also making progress with its expansion into data center chips following its agreement last month to buy Alphawave Semi for $2.4 billion. During an earnings call July 30, CEO Cristiano Amon said he is already in talks with potential customers and expects to see data center revenues by fiscal year 2028.
Dive Insight:
Qualcomm, a maker of Snapdragon processors used in smartphones, laptops and other mobile devices, has been focused on diversifying its products to better accommodate the AI boom and reduce its reliance on the smartphone market.
Qualcomm’s acquisition of Alphawave Semi, set to close in calendar year Q1 2026, aligns with that strategy, Amon said. It would provide Qualcomm with Alphawave’s intellectual property and data center design capabilities, bolstering the chipmaker’s high-speed wire connectivity and compute silicon solutions.
“While we are in the early stages of this expansion, we are engaged with multiple potential customers and are currently in advanced discussions with a leading hyperscaler,” Amon said. In May, Qualcomm signed a memorandum of understanding with Humain to develop AI data centers in Saudi Arabia. It has also made its Oryon processors compatible with Nvidia technology for data center applications.
In addition to meeting data center demand, it’s betting on smart glasses and wearable technology to reshape the consumer electronics landscape. As AI continues to advance, Amon said these devices are transitioning beyond simply extensions of smartphones into new and unique experiences.
“We’re very optimistic about the trends we see in this area with major AI players, application developers and device makers investing in this space,” Amon said.
Qualcomm is already a major chipset supplier for Meta’s smart glasses, which recently expanded into Oakley and Ray-Ban styles. It also has a partnership with China’s Xiaomi, which launched its AI glasses in the quarter.
Beyond wearables, Qualcomm is also seeing traction with its automotive business, driven by its digital chassis solutions, as well as industrial demand, Amon said.
The chipmaker has been taking steps to prepare for when Apple, one of its largest customers, stops buying its products altogether. Apple debuted its first modem chip with the launch of its iPhone 16e in February. In a disclosure to investors, Qualcomm said it expects Apple to increasingly use its own modem products, which could have a “significant negative impact” on its earnings moving forward.
Despite lower activity from Apple, Amon said the company expects handset revenues to grow 5% from Q3 to Q4.
During the three months that ended June 29, Qualcomm saw the vast majority of its revenue come from the sale of chips and hardware. Approximately $6.3 billion stemmed from processors and chips for mobile handsets. Meanwhile, $984 million came from the company’s growing automotive segment and $1.7 billion from its smart devices unit, which includes products sold for PCs, tablets, smart glasses and augmented reality headsets.
Qualcomm’s licensing business generated nearly $1.5 billion in revenue.
Looking ahead, the chipmaker is forecasting Q4 revenue between $10.3 billion and $11.1 billion.
During the call, analysts questioned whether Qualcomm’s growth in the quarter came in part from pull-in sales related to China amid tariff uncertainty.
Amon assured them that “we’re not seeing any evidence of pull-in,” attributing the upside to early orders ahead of its new chip product launch in September.
