Qualcomm Will Raise Chip Prices September 1st as Memory Costs Squeeze Its Margins

Qualcomm is about to make phones more expensive in yet another way. CEO Cristiano Amon confirmed on Wednesday that "prices are going to go up" across the company's product lineup starting September 1st, according to CNBC. It's the clearest confirmation yet of rumors that circulated last week suggesting the increase would land "in the double digits" percentage-wise.

The timing is notable because Qualcomm didn't announce this while riding high. It came alongside a 20 percent year-over-year drop in revenue from Qualcomm's handset business, the weakest quarter that division has posted since 2021. In its earnings presentation, the company pointed to "unprecedented increases in memory pricing and supply constraints" as the culprit. Memory chips have been getting more expensive across the entire electronics industry lately, pushing up prices on everything from game consoles and laptops to Raspberry Pi boards, and Qualcomm says there's no sign that trend is easing.

What's striking is Qualcomm's response to that squeeze: rather than absorb thinner margins, it's passing the cost increase straight through to whoever buys its chips, which ultimately means phone makers and, eventually, the people buying phones.

There's a second headwind baked into Qualcomm's outlook, too. The company said it expects an "acceleration" in the decline of revenue tied to Apple, telling investors that its modem share for the upcoming iPhone launch is "expected to be materially lower." Qualcomm modems have powered iPhone connectivity for years, and Apple has been gradually working to bring modem production in-house. Executives raised the point twice on the earnings call, and both times framed it as something the company's other business lines would need to offset.

That framing points to a bigger shift underway at Qualcomm. The company is signaling that it no longer wants to be primarily a phone chip supplier. It said Wednesday that phones will soon account for only half of its total revenue, and by 2029 that share is expected to fall to just one-third, as its data center and automotive businesses expand to fill the gap. In other words, Qualcomm is repositioning itself as a three-legged business spanning handsets, data centers, and cars, rather than a company defined by smartphones.

The automotive push got a concrete data point this week: Qualcomm announced a decade-long deal to supply chips for BMW, a long-term commitment that fits squarely into that diversification strategy.

Meanwhile, back in the handset world, there are early signs that device makers are already adjusting to rising component costs. Qualcomm EVP, CFO, and COO Akash Palkhiwala said some phone manufacturers are starting to use "prior generation" Qualcomm chips in their devices, an apparent cost-saving workaround as newer components get pricier.

Taken together, the picture is one of a company managing multiple pressures at once: surging memory costs squeezing margins industry-wide, a marquee customer in Apple pulling back on modem orders, and a strategic bet that data centers and cars will matter more to its future than phones do. The September 1st price increase is the most immediate, tangible consequence for anyone buying a phone this fall. Exactly how much of that hike gets passed on to consumers by device makers remains to be seen, but with memory prices still climbing and no relief in sight, phone buyers are looking at rising costs from more than one direction at once.