Qualcomm to raise chip prices from September 1
What's the story
Qualcomm has announced its decision to raise prices on all its processors from September 1. The move was confirmed by CEO Cristiano Amon during a recent earnings call. The price hikes are expected to be in "double digits," according to reports. This comes as Qualcomm reported its lowest quarterly handset revenue since 2021, with a 20% year-over-year decline in revenue from its handset business.
Revenue drop
Price hike in response to external pressures
Qualcomm attributed the revenue drop to "unprecedented increases in memory pricing and supply constraints."
These factors have been pushing prices up across various products, from gaming consoles to laptops.
Qualcomm also expects a major drop in revenue from Apple products, with its "modem share for the upcoming iPhone launch is expected to be materially lower."
The company hinted during the earnings call that other businesses would make up for this loss.
Strategic shift
Qualcomm's strategic shift toward handset, data center, and automotive sectors
Qualcomm has revealed that it plans to become a three-legged stool of handset, data center, and automotive.
The company said that soon only half of its revenue will come from phones, and only one-third by 2029.
This strategic shift comes as part of its efforts to diversify its business beyond the smartphone market.
Notably, Qualcomm recently inked a decade-long deal to supply chips for BMW cars.
Industry impact
Implications for Android device prices
Qualcomm's decision to raise prices on Snapdragon mobile chips could lead to more frequent price hikes on Android devices.
The company has already informed its customers, mostly Android phone makers, about the impending price increases for any chips shipped after September 1.
This comes as Qualcomm has exhausted its ability to absorb higher costs from suppliers.