Chipmaking giant Qualcomm has joined the growing list of tech companies expressing concern over the economic effects of U.S. trade policy. On Wednesday, the company issued a forecast for its third-quarter earnings that fell just short of Wall Street expectations, reflecting caution amid ongoing trade tensions between the U.S. and China.
Trade Tensions Cloud Qualcomm’s Outlook
Chief Financial Officer Akash Palkhiwala addressed the issue during a call with analysts, stating the company’s Q3 revenue guidance reflects “the tariffs as they stand today.” He added, “We do not see any material, direct impact—there is smaller direct impact and some minor changes in demand… (It’s) difficult for us to predict.”
Qualcomm’s shares dropped an additional 6% in after-hours trading, extending the stock’s year-to-date losses of more than 3%. The decline came as investors reacted to concerns that global trade instability could weaken demand across Qualcomm’s major business segments.
Apple’s Shift Raises Additional Questions
One key pressure point for Qualcomm is Apple’s continued move to manufacture its own modem chips. Apple, a longtime customer, accounted for 27% of Qualcomm’s revenue in the second quarter, but its in-house development efforts are expected to reduce future reliance on Qualcomm’s components.
Michael Schulman, chief investment officer at Running Point Capital, described the transition bluntly: “Apple’s long-telegraphed move to bring modem development in-house is less a surprise and has been more of a slow-motion divorce—with Qualcomm playing the role of the efficient but increasingly expendable ex.”
Forecast Highlights Mixed Sentiment
For the current fiscal quarter, Qualcomm projects revenue between $10.1 billion and $10.5 billion, with the midpoint slightly below analysts’ consensus of $10.35 billion. The company anticipates adjusted earnings per share between $2.60 and $2.80, with the midpoint surpassing the forecasted $2.67 per share.
Despite slowing demand and geopolitical risks, Qualcomm maintains its position as the world’s leading supplier of modem chips for wireless communication. The company continues to serve key clients such as Apple, Xiaomi, Oppo, and Vivo, even as it navigates increasing competition in China’s growing domestic chip sector.
Broader Industry Impact
Summit Insights Group analyst Kinngai Chan noted that Qualcomm’s exposure to multiple sectors—smartphones, consumer IoT, and automotive—makes it vulnerable to external shocks like tariff disruptions. “Tariff uncertainties will definitely have an impact to its topline outlook,” he said.
Qualcomm’s recent SEC filing acknowledged the unpredictability of the situation, stating that tariffs and “related actions” could significantly affect its business.