On Wednesday, Qualcomm (NASDAQ: QCOM) reported fiscal third-quarter earnings that largely aligned with analyst expectations, but its profit guidance for the current quarter fell short of estimates. The company attributed the weaker outlook to ongoing supply constraints for computer components, particularly memory chips, while its revenue guidance met expectations.

Qualcomm CEO Cristiano Amon stated in an interview that the company is taking concrete steps to expand future profit margins, including a comprehensive price increase for its chips, which are currently primarily supplied to smartphone manufacturers, effective September 1. He also noted the company is exploring other methods to optimize its supply chain. Qualcomm shares slipped in after-hours trading following the announcement.

"Costs have gone up, and prices will follow," Amon said.

For the third quarter, Qualcomm reported adjusted earnings per share of $2.21 compared to the expected $2.23, and revenue of $9.95 billion compared to the $9.67 billion forecast. For the current quarter, the company projects adjusted earnings per share between $2.05 and $2.25 and revenue in the range of $9.7 billion to $10.5 billion. Analysts had anticipated adjusted earnings per share of $2.36 and revenue of $10.02 billion.

"The semiconductor industry is experiencing broad-based input cost increases, covering wafer fabrication, assembly, testing, advanced packaging, memory, and other materials," Qualcomm said in a statement, though management noted that "revenue remains healthy."

Qualcomm's handset business remains its largest chip sales segment, even as Amon seeks to diversify into automotive, smart glasses, and robotics. The company aims for non-smartphone sales to account for 60% of its revenue by next year. Qualcomm reported phone chip sales of $5.1 billion, a 20% decline year-over-year, which the company said reflects a market bottom in China.

Amon indicated that dynamics in the smartphone market are making low-end and mid-range devices less competitive, primarily due to affordability issues. He also noted that even in the premium Android phone market, where Qualcomm holds a dominant position, customers are seeking lower prices.

"Due to rising memory prices, consumer preferences in the high-end category are shifting toward lower-end premium models and last year's models," Amon said. "Gross margins are also changing because of the high supply costs you're all hearing about," Amon added. "This is a temporary, short-term issue, and we are addressing it with price increases."

Qualcomm's automotive business was a standout performer. The company reported automotive sales of $1.59 billion. In June, it set a target of reaching $10 billion in automotive revenue by 2029. On Wednesday, Qualcomm also announced a deal to supply digital cockpit chips to BMW. The company is also pursuing a presence in the fast-growing data center AI infrastructure market. Amon stated that the company remains on track to achieve $5 billion in data center revenue next year.

On Wednesday, Qualcomm also announced the completion of its acquisition of Modular, a closely-watched AI programming technology software company, and said it would unveil its AI software platform at a conference in August. Its chips for low-power industrial applications and smart glasses are categorized under IoT revenue. This business segment saw sales rise 9% year-over-year to $1.83 billion.

Net profit for the quarter was $2 billion, a 25% decline from $2.66 billion in the same period last year. Qualcomm generates substantial profit through its QTL division, its technology licensing business, which licenses its intellectual property for cellular connectivity and other chip technologies to other companies. Qualcomm's QTL revenue was $1.28 billion, exceeding the StreetAccount estimate of $1.26 billion.