Qualcomm Braces for Earnings Dip as Amazon Deal Offsets Apple Revenue Loss
Qualcomm has secured a multiyear custom silicon agreement with Amazon worth up to $60 billion in purchases over a decade, with revenue beginning in the December quarter. The company expects non-handset revenue growth above 60% in fiscal 2027 to compensate for sharply declining Apple product sales after the next iPhone launch. Wall Street analysts forecast normalized earnings per share will slip to $10.20 in fiscal 2027 from $10.48 in fiscal 2026, reflecting the margin pressure from custom silicon manufacturing alongside the revenue transition.
Qualcomm's shift away from Apple dependency reflects a strategic pivot toward custom semiconductor manufacturing for cloud infrastructure providers. The Amazon agreement represents the company's largest named customer commitment in this emerging business line, with revenue recognition beginning immediately. This diversification addresses a structural vulnerability: Apple's decision to reduce Qualcomm's modem content in future iPhones will shrink a historically significant revenue stream by roughly half annually.
The financial transition creates a near-term earnings headwind despite overall revenue growth. Custom silicon production carries lower profit margins than Qualcomm's traditional licensing model, while establishing new data center business units requires elevated operating expenses before those segments reach maturity. Wall Street projects profitability will remain compressed through fiscal 2027 before recovering in 2028, contingent on gross margin improvement as manufacturing scales.
This earnings trajectory could affect technology sector investors evaluating semiconductor supply chain diversification and the risks of customer concentration. Corporate clients relying on Qualcomm's chip innovation may experience pricing adjustments as the company manages margin pressures during the transition. The story also signals how major tech companies—both Apple and Amazon—are reshaping semiconductor markets by developing or commissioning custom silicon, potentially reshuffling competitive dynamics and component sourcing across the industry.