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Qualcomm and SoftBank-backed Arm posted strong quarterly sales growth on Wednesday as the chipmakers benefited from better than expected smartphone demand.
Qualcomm reported revenue of $11.7bn for the quarter to the end of December, above consensus estimates in a S&P Capital IQ poll of $10.9bn and up 17 per cent year on year, and gave March quarter guidance that was above expectations, with a high end of about $11bn.
Arm also beat revenue forecasts for its quarter to the end of December at $983mn, up 19 per cent year on year. The UK chip designer gave guidance for the current quarter of about $1.2bn, in line with estimates.
Despite beating revenue forecasts, Qualcomm shares were down more than 4.5 per cent in after-hours trading, while Arm shares were about 6 per cent lower. Shares in both groups have rallied over the past year, setting a high bar for their quarterly earnings reports.
Cristiano Amon, Qualcomm chief executive, told investors the company had seen better than anticipated demand for its smartphone products, thanks in part to Samsung’s wholesale adoption of its Snapdragon 8 Elite chips for its flagship new AI smartphone, the S25.
Both Qualcomm and Arm — which supplies Qualcomm with architectural designs — are betting that demand for artificial intelligence features, such as virtual assistants that run on more powerful chips, present a significant growth opportunity. This includes smartphones, where leading device makers Apple and Samsung are investing heavily into new AI assistant features.
Qualcomm’s long-running partnership with Apple to supply it with 5G modems is set to come to an end in 2026. Apple is bringing more of its chip design in-house.
It is now in the process of diversifying its chip business beyond smartphones into sectors such as automotive computer systems and PCs. On Wednesday it said it believed the recent success of China’s DeepSeek AI models is good news for the on-device AI features that Qualcomm’s chips power, as models become more capable and efficient.
In December, Qualcomm came out on top in a licensing dispute with SoftBank-backed Arm over the technology it uses to build custom “cores” for its chips. A US jury ruled largely in Qualcomm’s favour in the legal dispute, which stemmed from its acquisition of Nuvia in 2021.
The dispute saw Arm raise the prospect of withdrawing Qualcomm’s licence to use its architecture. On the call with investors on Wednesday, Qualcomm’s Amon said Arm had indicated it had “no current plans to terminate the Qualcomm architecture agreement”.
In a letter to investors, Arm chief executive Rene Haas said the company was also benefiting from the rise of “edge” AI applications on smartphones, applications that can run on the device without needing to connect to a cloud server. Apple, for example, has adopted Arm’s latest “V9” chip architecture for chips in the iPhone 16.
He said the company’s involvement in a $500bn US government-backed investment project led by OpenAI and SoftBank, known as Stargate, showed that its chip designs would play a “critical role” in one of the largest AI infrastructure projects to date.
SoftBank founder Masayoshi Son has a grand strategy for AI, which includes Stargate and envisions Arm moving into chip production, say people familiar with the matter.
The Japanese group’s ongoing pursuit of Ampere, an Oracle-backed chip designer that could be valued at close to $6.5bn, is another sign of Son’s intent, say people briefed on the acquisition talks, which they warn could still fall apart.
