Qualcomm, Arm shares drop over widening memory chip shortage

Shares of Qualcomm and Arm declined more than 8% in after-hours trading following their quarterly reports, amid concerns over a widening memory chip shortage.

Qualcomm CEO Cristiano Amon said memory constraints are limiting phone production, particularly in Chinese markets.

The shortage is driven by a surge in AI infrastructure development, prioritizing data center memory over smartphone components.

Analysts warn the shortage could persist until at least 2028, despite major chipmakers like Samsung, SK Hynix, and Micron investing to expand capacity.

Both Qualcomm and Arm are seeking to increase revenue from data center markets, which may offset some risks from the smartphone sector.

However, ongoing supply constraints are expected to affect global device availability and prices in the near term.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

Manufacturing is shifting for the long haul

The memory crunch looks unlike a normal supply and demand swing. IDC (International Data Corporation, a market research firm) says major manufacturers such as Samsung Electronics, SK hynix, and Micron Technology may be permanently reallocating global silicon wafer capacity toward memory priorities 1.
Leading memory suppliers have moved output away from consumer electronics, including smartphones and PCs. More capacity is going to higher-margin parts used in AI data centers such as High Bandwidth Memory (HBM) and high-capacity DDR5 1.
Qualcomm CEO Cristiano Amon said memory supply, not processor chips, could set the ceiling for how large the mobile market can get 2.

Phones and PCs may cost more or ship with trimmed specs

Price increases look likely. IDC says PC vendors have warned clients about 15% to 20% hikes, and its downside scenarios put 2026 smartphone average selling price growth at 3% to 5% under a moderate case or 6% to 8% under a pessimistic case 1.
To keep prices steady, device makers may turn to shrinkflation. That can mean weaker cameras, lower-end displays, or less RAM (short-term memory that helps devices run apps and multitask) in new models 3.
The AI surge can make it harder and pricier to add the memory needed for on-device AI. IDC warns entry-level and mid-range smartphones may drop back to 4GB RAM configurations in 2026 to hold price points 4.