Qualcomm closes Modular deal, expands BMW pact as weak forecast hits shares

Qualcomm completed its $3.9 billion all-stock acquisition of AI software startup Modular, expanded its BMW Group automotive chip partnership and reported fiscal third-quarter results that included a modest revenue beat but weaker-than-expected current-quarter earnings guidance. Revenue for the quarter ended June 28 fell 4% from a year earlier to $9.95 billion, above the $9.62 billion estimate cited by the newer report, while adjusted earnings per share were $2.21 and net income fell 25% to $2 billion. For the current quarter, Qualcomm forecast adjusted earnings per share of $2.05 to $2.25 on revenue of $9.7 billion to $10.5 billion, below the LSEG consensus earnings estimate of $2.36. CEO Cristiano Amon said Qualcomm will raise chip prices by double-digit percentages starting Sept. 1 as a temporary, short-term response to higher costs in wafer fabrication, assembly, testing, advanced packaging, memory and other materials. The company said memory prices were up roughly 300% from a year earlier and that margin pressure should ease only gradually as older contracts roll off and new product cycles begin. Qualcomm also said its modem chip supply share in Apple’s next-generation iPhone will be significantly lower than the previously estimated 20%, signaling faster-than-expected erosion in Apple-related business. Handset chip sales fell 20% to $5.1 billion, while automotive revenue rose 61% to $1.59 billion and IoT revenue increased 9% to $1.83 billion. Qualcomm said Chinese handset revenue bottomed in the fiscal third quarter and should return to double-digit sequential growth in the fiscal fourth quarter. Shares fell after the outlook, overshadowing the company’s AI, automotive and diversification moves.