Qualcomm faces loss of Apple business, rated 'Underperform' by Bank of America
by Horace Dediu
Writing of the wall faded after years in the sun
The analysts see Qualcomm as a leader in smartphone processors, but noted the handset chip market has matured and faces potential headwinds, including higher memory prices and a decline in business from Apple. They added that the company faces the well-known imminent ~$7 billion to $8 billion loss of Apple business.
Apple has historically been one of Qualcomm’s largest modem customers, but the bank expects the relationship to wind down as the iPhone maker shifts to its own internally developed chips. “QCOM's modems will be completely phased out of iPhones by Fall 2027 as top customer Apple shifts to internal modems,” they wrote.
The report also highlighted a broader trend of smartphone manufacturers investing in their own semiconductor capabilities. Samsung has reduced Qualcomm’s share of processors used in its Galaxy lineup, while Chinese smartphone maker Xiaomi has committed about $7 billion toward internal silicon research and development.
Source: Yahoo Finance
NB: It's not just Apple that is bailing…
Apple sued Qualcomm in a bitter battle over the structure of its licensing. As did Nokia. The nature of the relationship was always suboptimal for OEMs as they had to pay a percent of device sales for component on the basis of IP licensing. An outrageous request with fed huge profits to Qualcomm but which compelled everyone to seek alternatives.
Now, after years of development, Apple finally has a suitable alternative and they will run as fast as they can away from Qualcomm. So will everyone else.
3 comments
deemery ·
I wonder how much damage Apple could do to Qualcomm if it put its replacement code Open Source... It's fun to consider that possibility of damaging Qualcomm's patent-based extortion. But frankly I wouldn't advise Apple doing this, even if Tim wanted to 'get' Qualcomm. I'm sure Qualcomm's lawyers would assert patent violations and tie the whole thing up in Eastern District of Texas patent lawsuits. :-(
(As someone who has worked on multiple International Standards, albeit not in this domain, I always thought "Standards Essential Patents" that required licensing payments to be actively hostile to the best interests of the community/world at large. Patent holders should surrender, or at least lease at ZERO COST, those patents.)
farshad ·
Let the sleeping dogs lie?
Yet, perhaps Snapdragon’s loss is Apple Silicon’s gain (?)
This seems like standard Apple SOP. They tend to systematically eliminate any impediments to the so-called Cook Doctrine, whether it’s Seagate, Intel or Qualcomm.
Some questions beyond efficiency:
What new Apple devices will exploit this new capability? Will we see modems in MacBooks?
Would removal of this ‘tax’ make new Apple service opportunities more possible? Headphones with cellular chips and Apple Intelligence? Some form of global roaming, say, for Apple Watch?
deemery ·
From the time Apple bought Intel's modem business line, I thought the big strength would be Apple's ability to think 'systems', versus Qualcomm's world of selling either patent licenses or discrete components. Following along the 'software defined radio' stuff, Apple can design systems that refactor the functionality of a modem chip, moving some of that into general purpose cores, some into AI/special purpose cores, and some of it into other parts of the hardware. And that refactorization would build on not just phones and "large things", but also Apple Watch and AirPods.