Apple Is Designing iPhones, iPads Without Qualcomm Parts, Source SaysBy
Qualcomm stock drops on further escalation of Apple fight
Analysts say Apple unlikely to fully abandon Qualcomm chips
The product plans are in the early stages and may still change, said the person, who asked not to be identified because the matter is private. Apple may use modem chips from Intel Corp. and MediaTek Inc. instead of Qualcomm’s, the person said. Apple made the decision amid a dispute over the iPhone maker’s access to the San Diego-based company’s proprietary technology, said people familiar with the matter.
Shares of Qualcomm fell as much as 8.1 percent, the biggest intraday drop since January, to $50.25 in New York on Tuesday. Apple shares were up 1.2 percent to $168.78.
Apple chip orders for the iPhone add as much as $1.75 billion a year for Qualcomm, according to an estimate by Raymond James & Associates. If that business went away it would represent about a 7.5 percent cut to the chipmaker’s annual sales, based on last year’s total revenue of $23.5 billion.
“We believe a full exclusion from next year’s iPhone, while certainly possible, is not likely,” Chris Caso, an analyst at Raymond James, wrote in a note Tuesday.
Caso believes Apple is unlikely to walk away from Qualcomm’s products completely because that would make it too reliant on untried technology from Intel. Modems supplied by the two chipmakers are the key components in technology that allows smartphones to connect to cellular networks and access high-speed wireless data. Qualcomm is the largest maker of such semiconductors and had been the exclusive supplier of the part until Apple began using Intel chips in some versions of the iPhone 7.
Qualcomm reports quarterly earnings and will give its outlook for the current quarter Wednesday after the market closes.
Apple and Qualcomm have been fighting each other over patent licensing with the iPhone maker accusing the chip designer of abusing its market dominance with high royalties. Qualcomm has fought back and is seeking to stop Apple from making and selling its smartphones in China.
An Apple representative said the company doesn’t comment on future products.
Apple made the decision about next year’s products because Qualcomm withheld software needed to test chips in prototypes, the Wall Street Journal reported.
“The Qualcomm modem that could be used in the next generation iPhone has already been fully tested and released to Apple,” Qualcomm said in a statement to Bloomberg News. “We are committed to supporting Apple’s new devices consistent with our support of all others in the industry. Qualcomm’s wireless solutions remain the gold standard for premium tier smartphones.”
— With assistance by Mark Gurman, and Nate Lanxon