Qualcomm shares fell after the chipmaker issued a weaker-than-expected profit forecast, as soaring component costs, supply shortages and slowing smartphone demand weighed on its largest business.

The company expects adjusted earnings of US$2.05 to US$2.25 per share for the quarter ending in September, below analysts’ average forecast of around US$2.36.

Revenue is forecast to reach between US$9.7 billion and US$10.5 billion, broadly in line with market expectations.

Qualcomm shares dropped more than 4% in extended trading following the results, although some reports showed steeper declines during the session.

The company confirmed it will raise chip prices from September 1 to offset higher costs across wafer fabrication, assembly, testing, advanced packaging, memory and other materials.

“We’re just passing through big cost increases that we have,” Qualcomm chief executive Cristiano Amon told Reuters, adding that pricing would be negotiated with individual customers.

The increases could add further pressure to smartphone and consumer electronics manufacturers, potentially flowing through to Australian retail prices across phones, wearables, laptops and other connected devices.

Qualcomm is also preparing double-digit price increases after informing customers it could no longer absorb rising supply chain costs.

The warning follows a sharp downturn in the broader smartphone chip market.

Preliminary Counterpoint Research figures showed global smartphone processor shipments fell 15% year-on-year during the first half of 2026, with Qualcomm and MediaTek shipments both declining by more than 25%.

Smartphone memory prices reportedly surged more than 300% during the June quarter, forcing manufacturers to reduce production and encouraging consumers to choose cheaper premium devices or older models.

Qualcomm’s handset revenue fell 20% to US$5.09 billion during the quarter, although it came in slightly ahead of expectations.

The chipmaker also warned that revenue from Apple would decline faster than previously expected as the iPhone maker continues replacing Qualcomm components with its own chips.

Qualcomm said supply constraints would reduce its component share in the next iPhone range to well below an earlier estimate of 20%.

Automotive revenue provided a bright spot, reaching US$1.59 billion, while Internet of Things sales rose 9% to US$1.83 billion.

Qualcomm is now accelerating its expansion into automotive and AI data centre chips, targeting US$5 billion in data centre revenue during fiscal 2027 and US$15 billion by 2029.