Qualcomm has notified customers that it plans to introduce double-digit percentage price increases, citing supplier costs that the San Diego-based semiconductor company said have become impossible to continue absorbing internally.

In a letter sent to clients on Friday, the company said the new pricing structure will apply to all products shipped beginning September 1. The notice followed efforts by the company to reduce the impact of rising supplier expenses through internal measures and by seeking alternative component sources from other suppliers, according to the communication.

After Bloomberg reported on the notice, Qualcomm shares, traded under the ticker QCOM, fell 2.42%. Taiwan Semiconductor Manufacturing Co., traded under the ticker TSM, also declined during the same session, dropping 2.93%.

Qualcomm is one of TSMC’s largest customers and depends heavily on the Taiwan-based company, the world’s leading contract semiconductor manufacturer, for production capacity. As a fabless chip designer, Qualcomm relies on manufacturing partners rather than owning large-scale chip fabrication plants, making supplier pricing and foundry capacity important inputs for its cost structure. The price changes mark a shift from Qualcomm’s prior approach of absorbing supplier cost increases rather than passing them on to customers.

Component Shortages Add Pressure Across the Chip Industry

Rapid growth in artificial intelligence data center construction has tightened supplies of memory chips and other semiconductor components. Those constraints have produced broader effects across technology supply chains and have also affected standard components.

The smartphone industry has been among the sectors facing pressure from the shortages. Qualcomm, the world’s largest maker of smartphone processors, supplies chips used in Android devices made by major manufacturers worldwide. Because mobile-device makers typically plan component purchases around product launch cycles and production schedules, changes to chip pricing can become a direct issue for procurement budgets and device margins, though the customer response to Qualcomm’s notice has not been disclosed.

The company has also faced demand headwinds as memory chip shortages persist and capital continues flowing toward AI infrastructure projects. The customer letter said Qualcomm had exhausted internal actions to manage the higher supplier costs and had actively explored alternative sourcing options before determining that price increases were unavoidable. The revised pricing will apply to all shipments from September 1 onward, leaving customers with limited time before the new rates take effect.

Earnings Report Scheduled for July 29

Qualcomm is scheduled to report third-quarter financial results on July 29. The timing of the price increase notice, coming shortly before the earnings release, has drawn attention to the company’s cost pressures and profit margins.

The company declined to comment on Bloomberg’s report. Reuters said it could not independently verify the contents of the letter.

It remains unclear how customers have responded to the notification, including whether any have challenged the new pricing terms. The announced increases come as QCOM shares were already under pressure from wider semiconductor industry headwinds before Friday’s trading session.

With Qualcomm’s earnings call approaching, investors and analysts are expected to focus on management’s comments about supplier expenses, customer demand, and whether the company maintained margin levels during the prior quarter.