Shares of the company were down more than 4% in extended trading on Wednesday, while Apple (AAPL.O) shares were flat.
Qualcomm said supply constraints would reduce its share of components used in the next iPhone launch to well below its earlier estimate of 20%.
"It's availability of supply," CEO Cristiano Amon told Reuters in an interview.
Qualcomm also plans to raise prices starting September 1 in an effort to return its margins to historical levels, he added, citing rising costs across the supply chain, not just for memory chips.
"We're just passing through big cost increases that we have," Amon said, noting that Qualcomm will have to negotiate with each customer. "The temporary disconnect between cost and pricing causes a slight decline temporarily in gross margin."
DATA CENTER PIVOT
For fiscal 2027, the company expects the majority of its chip sales will come from categories other than smartphones.
On an earnings conference call, Chief Financial Officer Akash Palkhiwala said growth in Qualcomm's non-handset businesses in fiscal 2027 is expected to replace all Apple-related revenue from fiscal 2026.
Qualcomm has been expanding into the fast-growing AI data-center market, and is targeting $5 billion in revenue from the business by fiscal 2027 and $15 billion by 2029.
"We kind of replaced Apple with the data center," Amon said.
On the call, the CEO said Qualcomm has begun wafer production for its two custom chip deals with hyperscale customers, which will start generating revenue in the December quarter.
He added the company has completed the tape-out of its first-generation high-bandwidth compute chip, which combines compute and memory in a single package, ahead of a planned mid-2027 launch.
"The good news longer term is the company is quickly pivoting to non-handset revenues with record numbers in chips for the automotive industry and the launch of their first major data center products later this year," said Bob O'Donnell, chief analyst at TECHnalysis Research.
SMARTPHONE PRESSURES
Qualcomm expects adjusted profit to be between $2.05 and $2.25 per share in the fourth quarter, below analysts' average estimate of $2.36, according to data compiled by LSEG.
It forecast revenue of between $9.7 billion and $10.5 billion during the period, compared with estimates of $10.02 billion.
Revenue in its chip segment is expected to be between $8.4 billion and $9 billion, while analysts were expecting $8.49 billion.
Palkhiwala said fourth-quarter handset revenue would be about $5.2 billion, helped by Android growth despite lower Apple revenue. Analysts polled by Visible Alpha estimated $5.03 billion.
Revenue from the unit, which makes chips for smartphones, fell 20% to $5.09 billion in the third quarter, but came in ahead of the $4.96 billion that analysts polled by Visible Alpha were expecting.
While unit sales of Android phones began to recover, Amon said handset makers were forced to raise prices, which in turn prompted buyers to look toward the bottom end of the premium phone segment, or even at older models, both of which hurt Qualcomm margins.
"There was a mix change versus what we expected," Amon said.
The company's third-quarter revenue fell 4% to $9.95 billion, beating estimates of $9.67 billion. Adjusted profit came in at $2.21 per share, compared with estimates of $2.23.
