Qualcomm told customers of price increases effective Sept. 1, citing exhausted cost absorption. Investors bet on a revenue boost. The supply crunch is expected to last into next year.
Qualcomm Inc., the largest maker of smartphone processors, plans to raise prices by a double-digit percentage. The move will ripple through the tech industry.
The San Diego-based company sent a letter to customers Friday informing them of the increase, according to a copy of the document seen by Bloomberg News. The higher prices apply to products shipped after Sept. 1, Qualcomm told clients.
The company said it had exhausted its ability to absorb higher costs from suppliers. It also tried to secure alternative components from new sources. Neither effort was enough to avoid passing on the expense.
Like most of the tech industry, Qualcomm is dealing with historic supply shortages. A surge in AI data-center construction has strained production of memory chips and other semiconductors. More prosaic components have become hard to get.
Qualcomm is one of the biggest customers of Taiwan Semiconductor Manufacturing Co., the top provider of outsourced chipmaking. It in turn supplies South Korea's Samsung Electronics Co. and major Chinese phone makers including Xiaomi Corp. Qualcomm's chips also appear in Meta Platforms Inc. wearable devices.
Qualcomm shares had fallen as much as 2.7% Friday as part of a broader tech retreat. They hit a session high on the price-hike news, a sign investors anticipate a revenue boost. The stock closed down 1.5% at $168.49.
The company's sales have declined this year because memory-chip shortages have hurt the smartphone industry's ability to build enough devices. Wall Street expects the crunch to drag into next year.
Qualcomm, Apple Inc., Nvidia Corp. and most leading chip designers are all trying to get more supply out of TSMC. The Taiwanese company has said shortages will continue even as it boosts production.
TSMC has become a chokepoint for the global electronics industry. Rivals such as Samsung and Intel Corp. have yet to convince customers that their plants can produce high-end chips at the volume and quality needed.
Qualcomm carries an Alpha Score of 45 out of 100, a "Mixed" rating that reflects the tension between pricing power and supply-side headwinds.
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