Qualcomm, which primarily supplies chips for smartphone makers, has reported mixed results, with total revenue declining 3 percent to $10.6 billion during Q2 of fiscal 2026.
Today’s Omdia report said the smartphone market shipped 298.5 million units in Q1 2026, registering growth of 1 percent, primarily driven by vendor-led front-loading. Major smartphone brands accelerated shipments ahead of expected increases in memory and component costs, helping the market outperform early expectations.
Qualcomm CEO Cristiano Amon said the technology industry is undergoing a major transformation driven by the rapid rise of AI agents, which is influencing the company’s strategy across all its platforms. He highlighted strong momentum in Qualcomm’s expansion into the data center market, noting that a custom silicon project with a leading hyperscaler is progressing toward initial shipments later this year.
Qualcomm will share further details on its growth strategy, including developments in data centers and Physical AI, at its Investor Day scheduled for June 24.
Net income of Qualcomm surged to $7.37 billion, supported by a $5.7 billion tax benefit. Gross margin remained strong at around 54 percent, indicating stable profitability despite pressure on core operations.
The QCT semiconductor segment of Qualcomm generated $9.1 billion in revenue, down 4 percent year-on-year. Within this, smartphone revenue of Qualcomm remained the largest contributor at approximately $6.024 billion but declined 13 percent due to weak global demand and inventory and memory constraints.
In contrast, Qualcomm’s IoT revenue increased 9 percent to $1.73 billion. automotive revenue rose 38 percent to a record $1.33 billion, reflecting strong momentum in diversification.
The QTL licensing business delivered $1.38 billion in revenue, up 5 percent, with an EBT margin above 70 percent, continuing to provide high-margin and stable cash flow from Qualcomm’s 5G and intellectual property portfolio.
IoT growth was driven by industrial deployments, consumer devices, networking, and edge computing, reinforcing its role as a key diversification pillar. Automotive emerged as a major long-term growth engine, supported by Snapdragon Digital Chassis, advanced driver assistance systems, and connected vehicle platforms.
AI is central to Qualcomm’s strategy, spanning on-device AI across smartphones, PCs, and IoT, as well as expansion into data center AI chips and custom silicon. The company is positioning itself for an AI-driven smartphone upgrade cycle while advancing partnerships for AI accelerators and next-generation chip solutions across mobile, edge, and cloud environments.
Customer demand remains strong across premium smartphone OEMs, automotive manufacturers, and enterprise IoT segments. While backlog figures were not disclosed, pipelines in automotive and IoT continue to expand, indicating a shift in customer mix from consumer devices toward enterprise and industrial markets.
Qualcomm is increasing spending on AI chip development, data center silicon, and edge AI platforms, with higher R&D and SG&A costs impacting margins. At the same time, the company maintained strong capital returns, distributing $3.7 billion in Q2, including approximately $945 million in dividends and $2.8 billion in share buybacks. Total buybacks reached $5.4 billion in the first half, supported by a new $20 billion repurchase authorization. Qualcomm’s Q2 2026 performance highlights a strategic transition. While smartphones remain the largest revenue driver, growth is increasingly coming from IoT, automotive, and AI-driven semiconductor platforms. With $10.6 billion in revenue, IoT growth of 9 percent, automotive growth of 38 percent, and expanding AI investments, Qualcomm is reshaping its business toward a diversified AI semiconductor future.
BABURAJAN KIZHAKEDATH