Qualcomm posts $1.99bn automotive quarter, signs SpaceX 5G deal

By Elena Vasquez

Qualcomm generated $1.99 billion in automotive revenue in the July-September 2026 quarter, up 89% from $1.053 billion and a company record. The gain could not offset a 26% smartphone decline, leaving total GAAP revenue at $10.322 billion, down 8%, while IoT revenue rose 4% to $1.888 billion.

Non-GAAP revenue fell 7% to $10.442 billion, while non-GAAP earnings per share declined 28% to $2.17, slightly above market expectations. Shares fell more than 7% at one point in after-hours trading after the release, as the next quarter's profit outlook fell short.

Can non-smartphone businesses replace handset weakness?

Automotive revenue reached $6.004 billion for fiscal 2026, 52% higher than the prior year. Quarterly smartphone revenue fell from $6.961 billion to $5.137 billion, and full-year smartphone revenue dropped 13% to $24.072 billion.

Qualcomm's results pointed to two headwinds: Apple's continuing shift toward in-house modem design, a medium- to long-term drag, and higher memory prices. Those prices were raising device prices and cooling consumer demand.

CEO Cristiano Amon said: “fiscal 2027 is the point at which, along with the expansion of the data center business, revenue growth in businesses outside smartphones will hit full stride.” He reiterated guidance that non-smartphone revenue would grow more than 60% year over year in fiscal 2027.

What does the SpaceX agreement contain?

On the same day as the results, Qualcomm signed a multi-year agreement with SpaceX to supply base-station semiconductor platforms and physical-layer software through its communications-infrastructure Dragonwing brand. The chips will serve Starlink Mobile's ground-based 5G network, which SpaceX plans to launch in the US starting in 2027.

Deployment is expected to run into tens of thousands of base stations, and Qualcomm positions the agreement as the largest 5G-related project in its history. SpaceX senior vice president Michael Nicolls said: “the era of dropped calls — at home or on the go — should come to an end.”

The QRU100 and QDU100 chips support Massive MIMO configurations combining 64 transmit and 64 receive antennas. Qualcomm says this arrangement should increase capacity and spectral efficiency while reducing power consumption and the cost of large-scale deployment.

In October, SpaceX agreed to acquire 800MHz spectrum licences covering the entire US, supporting its plan to combine satellite and terrestrial networks. The move puts it in direct competition with AT&T, Verizon and T-Mobile US. Amon described the Qualcomm collaboration on X as a path toward future “AI-native 6G” infrastructure, a longer-term goal than the 2027 5G launch.

Can AI data-center chips drive Qualcomm's next growth phase?

Qualcomm is positioning AI data-center chips as another growth engine through a multi-generation collaboration with Amazon on custom semiconductors for AI inference. The arrangement includes optical interconnects running at up to 1.6 terabits per second.

The agreement establishes a warrant framework under which Amazon could purchase up to $60 billion of Qualcomm shares over the next decade. Qualcomm also signed a supply contract with an undisclosed major cloud provider.

Management kept its fiscal 2027 data-center revenue target at $5 billion and its fiscal 2029 ambition above $15 billion. Amon said the constraint was supply rather than demand, adding that better supply would have improved results.

Qualcomm reported full-year GAAP revenue of $43.12 billion, down 3%, and non-GAAP net income of $11.311 billion, down 15%. GAAP net income rose 146% to $13.628 billion because of a $5.7 billion tax benefit from reversing a past valuation allowance, rather than stronger core earnings.

What will price increases do to margins?

AI data-center demand has pushed memory prices higher, increasing costs for wafer manufacturing, assembly and testing, advanced packaging and other components. Qualcomm began raising product prices in September 2026, but expects the full gross-margin benefit in the second half of fiscal 2027.

For fiscal 2027 first quarter, Qualcomm gave the following guidance:

• Revenue: $10.4 billion to $11.2 billion
• QCT revenue: $9.0 billion to $9.6 billion
• Non-GAAP EPS: $2.15 to $2.35
• QCT pre-tax margin: 20% to 22%, down from 24% in the prior quarter

The $10.8 billion revenue midpoint exceeded market consensus of about $10.55 billion. The $2.25 EPS midpoint fell below the $2.32 consensus because Qualcomm front-loaded data-center research and development spending.

What does the signal mean for Japanese suppliers?

Qualcomm's automotive expansion could raise computing demands for Japanese automakers and their electronic-component and materials suppliers. Software-defined vehicles require more semiconductor content, while Qualcomm targets $10 billion in automotive revenue by fiscal 2029.

Data-center expansion could also lift demand for advanced packaging and optical-communications components. That makes the segment a variable Japan's semiconductor manufacturing-equipment and materials industries cannot ignore.

Investors are testing whether automotive, IoT and data-center growth can fill the revenue gap left by smartphones. They are also watching whether price pass-through restores margins as scheduled.

The next measurable tests are Starlink Mobile's 2027 US launch, the second-half fiscal 2027 gross-margin benefit, and progress toward Qualcomm's $5 billion data-center target in fiscal 2027 and more than $15 billion in fiscal 2029. SpaceX's spectrum acquisition and planned carrier entry will show whether the 5G build can reach scale quickly enough to challenge the three established US operators.