Qualcomm to Raise Chip Prices from September Amid Worsening AI-Driven Supply Shortage

Qualcomm (QCOM-US), the leading smartphone processor manufacturer, notified customers on Friday (24th) that prices for products shipped after September 1 will rise by double-digit percentages. This move is expected to trigger ripple effects across the global technology industry.

According to documents obtained by Bloomberg, Qualcomm informed customers of the price hike on Friday, stating it can no longer absorb rising supplier costs and that efforts to source alternative components from new suppliers have yielded limited results.

Like the broader tech sector, Qualcomm is facing unprecedented supply shortages affecting industries ranging from smartphones and supercomputers to automotive. The surge in AI data center construction has dramatically increased demand for memory chips and other semiconductors, tightening chip supply and making even basic electronic components harder to obtain.

Qualcomm is one of the largest customers of Taiwan Semiconductor Manufacturing Company (TSMC) (2330-TW) (TSM-US) and a key chip supplier for smartphone brands such as Samsung Electronics of South Korea and Xiaomi (01810-HK) of China. Additionally, Qualcomm chips are widely used in wearable devices from Meta Platforms (META-US).

Prior to the announcement, Qualcomm’s stock declined 2.7% along with broader tech weakness. However, after markets interpreted the price hike as potentially boosting revenue, the stock reversed course and briefly touched an intraday high. Ultimately, selling pressure prevailed, and the stock closed down 2.4% at $166.97 per share.

Qualcomm’s revenue this year has already been hampered by memory chip shortages, as smartphone makers have been unable to produce enough devices, thereby affecting Qualcomm’s chip shipments. Wall Street expects this supply crunch to persist into next year.

Currently, major chip design firms including Qualcomm, Apple (AAPL-US), and NVIDIA (NVDA-US) are aggressively competing for more capacity from TSMC. TSMC has previously stated that despite ongoing capacity expansion, chip shortages will continue for the foreseeable future.

With potential competitors such as Samsung and Intel (INTC-US) still unable to prove their fabs can reliably mass-produce advanced chips, TSMC has become a critical bottleneck in the global electronics supply chain.