Qualcomm Faces Challenges Amidst Apple Dependency Shift
Shares of Qualcomm dropped nearly 5% ahead of Thursday’s bell due to the impending loss of Apple as its primary modem client, overshadowing its positive quarterly projection.
The chip manufacturer headquartered in San Diego cautioned stakeholders about Apple’s switch to in-house modems, commencing with the iPhone 16e launch in February, which is expected to impact future chip earnings.
Qualcomm has shifted its concentration towards sectors like data centers and personal computers.
Furthermore, U.S. President Donald Trump’s new tariff warnings on semiconductors have emerged as a concern, potentially disrupting supply chains and affecting Qualcomm’s handset revenue, analysts have noted.
While smartphones and semiconductor chips have been exempt from these levies until now, Trump recently hinted at imposing tariffs on semiconductors, leading to worries about industry-specific duties.
The company’s CFO, Akash Palkhiwala, informed Reuters that no early chip orders have been observed, indicating that clients are not hurrying to pre-empt possible tariffs.
“Tariffs could slightly reduce handset revenue, but Chinese OEMs still regard Qualcomm’s Snapdragon mobile phone chip as crucial for worldwide 5G and AI-on-device marketing,” stated Michael Ashley Schulman, CIO at Running Point Capital.
Qualcomm, the leading modem chip supplier globally and a market indicator for smartphones, reported over a 15% increase in chip sales to non-Apple consumers this fiscal year, driven by premium Android releases.
TD Cowen analysts mentioned, “We foresee a solid market share at Samsung and an extended partnership with Xiaomi bolstering the handset segment while Apple’s chipset revenue transitions out of the equation.”
Moreover, Qualcomm is venturing into the augmented reality domain.
CEO Cristiano Amon revealed that the company now endorses 19 augmented reality concepts, including META’s Ray-Ban smart glasses, with expectations of this number growing.
According to data gathered by LSEG, the company’s 12-month forward price-to-earnings ratio stands at 13.36, trailing behind Nvidia at 34.91, Intel at 47.14, and Advanced Micro Devices at 35.33.
