Qualcomm targets data center expansion as smartphone sales decline
Facing a 20 percent drop in smartphone revenue, Qualcomm is pivoting toward the AI data center market to diversify its income streams.
Qualcomm reported a significant decline in smartphone sales during 2026, marking a 20 percent decrease compared to the previous year. In response to these headwinds, the semiconductor firm has signaled an strategic shift toward the data center sector, specifically targeting the burgeoning demand for artificial intelligence infrastructure.
During its Q4 2026 earnings call, the company projected data center revenue to reach $650 million in the first quarter of 2027. Executives expressed optimism for rapid growth, forecasting that this segment will generate $5 billion by year-end 2027 and expand to $15 billion annually by 2029. To facilitate this transition, Qualcomm is leveraging new partnerships with major technology players, including Amazon and Meta.
This move represents a critical attempt to stabilize the company's financial performance following a year where its total revenue reached $10.4 billion. By moving into the data center space, Qualcomm aims to reduce its historical dependence on the mobile device market as that sector faces saturation and cooling demand.