Qualcomm & Mediatek: Smartphone production plummets
π Both major mobile processor suppliers Qualcomm and Mediatek are experiencing significant revenue declines due to a global memory crisis affecting smartphone production.
πΈ Mediatek reported an 18% quarter-on-quarter revenue drop in Q1 2026, primarily because its low-cost processors are most sensitive to high memory prices.
π± Qualcomm expects an 18% decline in Snapdragon smartphone processor revenue for the upcoming second calendar quarter of 2026.
π° While Mediatek generated roughly $2.4 billion from smartphone chips, Qualcomm still made about $6 billion but is projected to fall to around $4.9 billion this quarter.
π Qualcomm's CFO stated that OEMs remain cautious on handset builds due to challenging memory industry dynamics affecting revenue projections.
π¨π³ Qualcomm expects the bottom in its China business to be reached soon, with a gradual recovery anticipated starting in Q3 2026.
β οΈ Analysts predict an overall smartphone sales decline of at least 8% for the full year, equating to approximately 1.15 to 1.2 billion units sold.
π Mediatek faces even steeper challenges with a potential 15% annual revenue drop, as it does not publish its own quarterly outlooks.
π Despite smartphone struggles, Qualcomm's stock rose following news of custom AI chips being delivered to hyperscalers starting in December 2026.
π» Qualcomm's CEO Cristiano Amon confirmed progress on data center CPUs and high-performance AI inference accelerators, though initial volumes are expected to be low.
π Qualcomm's total Q1 revenue was $10.6 billion, with net profit inflated by a one-time multi-billion dollar tax asset write-down that reduced taxable profit.
π Growth in automotive processor divisions is partially compensating for the weakness in the smartphone business segment for Qualcomm.
π§ Mediatek is seeking growth in its AI chip sector through design assistance for accelerators like Google's new TPU generation to offset weak mobile markets.
π Both companies indicate that reaching pre-crisis market levels may take considerable time even as they wait for the memory situation to stabilize.
π Year-over-year revenue comparisons look particularly grim for Qualcomm, showing an expected 22% decline compared to last year's figures.
- Qualcomm's total revenue reached $10.6 billion in the past quarter, demonstrating strong overall financial performance despite specific segment declines.
- Automotive processors are expected to partially compensate for the weakening smartphone business, providing a positive diversification angle for Qualcomm's growth.
- Qualcomm CEO Cristiano Amon highlighted that development of their leading data center CPU and high-performance AI inference accelerators is progressing well.
- A major positive catalyst emerged as Qualcomm plans to deliver the first custom AI chips to a hyperscaler in December, signaling new revenue streams beyond smartphones.
- Mediatek's stock price increased following its business report, reflecting market confidence despite broader industry headwinds.
- Mediatek is leveraging growth in AI chips through design assistance for accelerators like Google's new TPU generation to offset the weakening smartphone market.
- Qualcomm expects to reach a market bottom in China soon, with a gradual recovery anticipated starting from the third calendar quarter of 2026.
- Across all divisions, Qualcomm maintained profitability with a net profit of $7.4 billion, supported by a significant multi-billion dollar tax asset write-down that temporarily boosted earnings.
- Revenue from Qualcomm's Snapdragon smartphone processors is expected to decline by 18 percent in Q2 2026, while Mediatek already saw a 18 percent quarter-on-quarter drop in Q1 2026.
- High memory prices are disproportionately impacting low-cost and mid-range processors sold by Mediatek, with revenue from smartphone chips falling to just under $2.4 billion recently compared to Qualcomm's $6 billion in Q1 (though expected to fall to ~$4.9 billion in Q2).
- Year-over-year revenue decline for Qualcomm's mobile chip business is expected to worsen to 22 percent in the upcoming quarter, despite generating higher absolute revenue than Mediatek.
- Analyst conference remarks from Qualcomm CFO Akash Palkhiwala confirm OEMs remain cautious on handset builds due to challenging memory industry dynamics, leading to revenues coming in as anticipated rather than growing.
- Market observers project an overall sales decline of at least 8 percent for the smartphone processor market this year, equivalent to a volume drop of around 1.15 to 1.2 billion smartphones.
- Mediatek faces an even steeper potential drop of 15 percent in its smartphone business outlook, highlighting significant weakness in the mid-range segment.
- Qualcomm's Q4 net profit of $7.4 billion is artificially inflated by a multi-billion dollar tax asset write-down; profit before tax was only $2.2 billion, slightly below the previous year's result.
- Expected total revenue for Qualcomm in Q4 is between $9.2 billion and $10 billion, indicating continued contraction compared to prior quarters despite growth in automotive processors partially offsetting the smartphone downturn.