Market Overview

Qualcomm's Days Of Supplying To Apple Appear To Be Numbered

Qualcomm's Days Of Supplying To Apple Appear To Be Numbered

Shares of QUALCOMM, Inc. (NASDAQ: QCOM) lost nearly 7 percent Tuesday following reports that the company might see its modem technologies excluded from future Apple Inc. (NASDAQ: AAPL) devices, including the iPhone and iPad.

Although Qualcomm said in a statement it is "committed to supporting Apple's new devices," it's days as being part of Apple's supply chain are limited, Charter Equity Research's Edward Snyder said in a research report.

Specifically, Qualcomm's relationship with Apple will likely end within the next two years, although this shouldn't come as a surprise. Back in 2014, Apple made it clear it has "other plans" for future modems and started using some of Intel Corporation (NASDAQ: INTC)'s modem products instead.

"Indeed, we believe the genesis of the Apple-Intel relationship centers on an LTE modem that could eventually be used by Apple in an internally developed SOC," Snyder said. "It needs such a part if it ever hopes to enter the mid-tier phone market without taking a beating in margins. In exchange for the small fortune spent developing the part, Apple would founder the SOC and all future thin-modems at Intel."

This shift in strategy doesn't "leave much room" for Qualcomm — never one of "Apple's favorite suppliers." Nevertheless, Apple won't be rushing to drop Qualcomm as this implies it will be risking everything on Intel's first CDMA-enabled baseband.

Finally, Intel is believed to have given Apple a working prototype 5G device and development system last December and Apple has been "running through its paces" since then, the analyst also wrote.

"So while the timing of Apple dumping Qualcomm is debatable, the fact that it's the plan of record probably isn't," Snyder concluded.

Related Links:

For Qualcomm, It's What's Outside That Counts: Business Dynamics Overshadowed By Apple Litigation, NXP Merger

A Peek Into The Markets: U.S. Stock Futures Climb; Facebook Earnings In Focus

Latest Ratings for AAPL

Jan 2020MaintainsOutperform
Jan 2020MaintainsOutperform
Jan 2020MaintainsSell

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings

Posted-In: Apple Components Apple Supply Chain Charter Equity Research Edward Snyder iPadAnalyst Color Analyst Ratings Tech Best of Benzinga


Related Articles (AAPL + INTC)

View Comments and Join the Discussion!

Latest Ratings

TSCOPiper SandlerMaintains119.0
UNPBMO CapitalMaintains200.0
UNPArgus ResearchMaintains205.0
ISRGJP MorganMaintains665.0
EHTHRBC CapitalMaintains132.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at