HP Sales to Become Even Harder in 2026, Impacts Spreading Far and Wide
Jakarta, CNBC Indonesia - The global smartphone industry is under pressure due to a crisis of chip memory shortages that has caused component prices to surge sharply. Reports from research firms IDC and Counterpoint both indicate that global smartphone shipments in the first quarter of 2026 will decline compared to the same period in 2025.
This decline in smartphone shipments is impacting other businesses, one of which is chip designer Arm. For context, Arm-based chips dominate the global smartphone chip market. Nearly all smartphones on the market use CPU cores designed by Arm, whether through processors like Snapdragon, MediaTek, Exynos, or Tensor.
Arm’s shares reportedly plunged on Thursday (7 May) local time, after the company warned of a weakening smartphone market and challenges in securing supplies for its new artificial intelligence (AI) chips to meet rising demand.
Arm’s shares dropped 5% to US$225.43, with the decline expected to wipe out more than US$12 billion from the company’s US$252 billion market valuation.
Viewed over the course of this year, Arm’s shares have actually more than doubled, surpassing several other established chip players, quoted from Reuters on Friday (8 May 2026).
Arm has intensified its AI development efforts this year with new data centre chips touted as ammunition for Agentic AI, which are systems capable of operating autonomously. This new business expansion for Arm has been positively received, after its name was long known as a provider of chip designs for established companies like Qualcomm.
Although Arm has sufficient capacity to meet the initial US$1 billion in demand, the company has not yet secured supplies to meet demand beyond that, said CEO Rene Haas in a press conference.
Arm requires access to manufacturing capacity, wafers, and testing equipment for its AI chip development. The company stated that these new products are expected to generate more than US$2 billion during fiscal years 2027 and 2028.
TSMC, the world’s leading contract chipmaker, produces Arm’s AI chips using 3-nanometre technology made from two different silicon parts that operate as one chip.
Arm predicts a “slightly negative” figure in the smartphone sector during its performance report. Its designs support most smartphones in the world, but the chip memory shortage has burdened the industry, driving up electronics prices and slowing sales.
At least 14 brokerage firms raised their target prices for Arm shares after the company reported record quarterly revenue of US$1.49 billion for the fourth quarter of 2025 and forecast first-quarter 2026 revenue slightly above Wall Street estimates.
Most of Arm’s revenue comes from licensing its technology to companies like Nvidia and Apple, as well as collecting royalties on the use of its chip designs.