Qualcomm's Handset Chip Business Shrinking from Both Sides

Qualcomm's (QCOM) largest revenue line is shrinking from both the Android and Apple sides. In fiscal Q3 2026, the company reported $9.9 billion in revenue, with $5.1 billion coming from its handset chip business.

The data center business, meant to diversify away from phones, has not yet started shipping and will generate revenue in the December quarter, but at a lower margin than Qualcomm's baseline gross margin range of 48% to 50%. The company expects custom silicon wins to land their first revenue in the December quarter.

Qualcomm's Android revenue is down 20% year over year, with an earnings hit of more than $1.50 per share. On the Apple side, the company says its share of the upcoming iPhone launch will be materially lower than its prior 20% estimate, and forecasts Apple product revenue falling about 50% from the September quarter to the December quarter.

Qualcomm's management notes that Chinese handset revenue has bottomed in fiscal Q3 2026, but there is no floor on the Apple side. The company expects non-handset revenue growth to accelerate from 24% in fiscal 2026 to more than 60% in fiscal 2027, enough to replace all of fiscal 2026's Apple product revenue.