Harsh Smartphone Forecast Reinforces Our Decision to Exit This Name

If there were any lingering questions about the Portfolio’s decision to exit our remaining shares of Qualcomm (QCOM) at $165 and some change back on January 15, the new 2026 smartphone forecast from IDC should put them to rest.

The research firm sees global smartphone market shipments falling 12.9% this year compared to 2025 as the memory chip shortage we’ve talked about with you in January and early February creates what IDC called “a crisis like no other.”

Another research firm, Counterpoint, issued a similarly alarming forecast on Friday, predicting a decline of 12.4% for smartphone sales this year. Much like IDC, Counterpoint cites “full-scale supply shock” related to memory chips.

The thinking is that memory shock will likely persist until mid-2027, and impact low- to mid-tier smartphones more than higher-end ones given not only availability but also higher costs. This is where the Apple (AAPL) supply chain can be a differentiator as well as its iPhone line-up that skews more toward higher-end Pro models.

Because this memory supply issue will impact PCs and other consumer electronic markets, it’s likely to be a tough road for Qualcomm, but also companies like Intel (INTC) and AMD (AMD) that have greater PC exposure. The impact on those end markets could also slow Qualcomm’s efforts to diversify its revenue stream just as its existing contract to supply 5G modems to Apple runs out in March 2027.

Other companies that will be impacted include Skyworks (SWKS) , which is merging with competitor Qorvo (QRVO) , as well as former Portfolio holding Universal Display (OLED) . Skyworks will be presenting at the Morgan Stanley Technology conference early next week, and it will probably focus its comments on the cost reduction and synergy benefits of combining with Qorvo. We’ll be more interested in what it says about the two-thirds of the combined revenue stream that comes from the smartphone market.

Odds are there won’t be much said that thwarts the outlook for its largest end market, and in our experience these companies tend to be a little behind the curve when it comes to forecasting slowing demand. While the shares of key smartphone suppliers could bottom out in 1H 2026, we may not see any meaningful and substantial movement in their shares until 2H 2027.

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At the time of publication, TheStreet Pro Portfolio was long AAPL.