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Arm Holdings stock sinks over 8% as memory chip shortage fears hit phone productionArm and Qualcomm shares dropped as memory chip shortages hurt phone output; AI demand shifts supply to data centers. Samsung, SK Hynix, and Micron lead.By Bloomberg  February 5, 2026, 7:52:09 AM IST (Updated)3 Min ReadShares of Arm Holdings Plc fell steeply after the semiconductor companies delivered quarterly reports, hurt by concerns of a shortage of memory chips, crimping growth in the electronics industry.

The stock declined more than 8% in extended trading late Wednesday, February 4, after management signalled that memory constraints will limit phone production.

Shares of Qualcomm Inc. fell over 9% in extended trading on Wednesday after its guidance for the ongoing quarter failed to enthuse the street. Qualcomm is the largest maker of processors that run smartphones, and Arm gets much of its revenue from royalties on technology used by that industry.

The historic build-out of artificial intelligence infrastructure is driving the shortage of memory chips, which help computers manage data. Manufacturers of the components have concentrated on supplying AI data centres, leaving less production for phone components.

That means fewer products ultimately reach consumers, who will have to pay higher prices.

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“Industrywide, memory shortages and price increases are likely to define the overall scale of the handset industry,” Qualcomm Chief Executive Officer Cristiano Amon told analysts on a conference call. Amon said Chinese customers in particular have said they’ll build fewer phones than planned because they can’t get enough memory chips.

Silver linings

On the other hand, both Qualcomm and Arm are poised to benefit from the AI boom. The companies are positioning themselves to get more revenue from data centre operators — a shift that should help them in the long run. But they’re still vulnerable to swings in the smartphone market.

One silver lining is that phone manufacturers are prioritising the most expensive phones. That’s helping bolster Qualcomm’s sales of higher-end chips and propping up Arm’s royalty revenue.

Other companies have raised alarm bells about the memory crunch. MediaTek Inc., a chipmaker based in Taiwan, cited the issue during a conference call this week, calling it an “evolving” situation. Intel Corp. CEO Lip-Bu Tan, meanwhile, said the shortages are likely to persist for years.

“There’s no relief as far as I know,” he said during an event Tuesday. Suppliers have told him that things won’t improve until 2028, Tan said.

Samsung Electronics Co., SK Hynix Inc. and Micron Technology Inc. are the three biggest makers of memory chips. Their technology is used to hold information in everything from cars to smartphones, but a key focus right now is keeping up with AI demand.

Data centres rely on an advanced chip called high-bandwidth memory, or HBM, to run AI software and services. Memory companies have invested heavily in expanding production of those components — at the expense of other supplies.

The industry is now attempting to increase its total capacity. But that will take time: Building and equipping factories can take more than a year.Continue ReadingFirst Published: Feb 5, 2026 7:51 AM ISTTagsArm Holdingsartificial intelligence AIAsian MarketChip shortageQualcommUS markets