Qualcomm shares rose more than 3 percent on Tuesday after a prominent analyst said Apple could use the company’s 5G modems in its 2023 iPhones, rather than relying on internally developed technology.
“My latest survey indicates that Apple’s own iPhone 5G modem chip development may have failed, so Qualcomm will remain exclusive supplier for 5G chips of 2H23 new iPhones, with a 100% supply share (vs. company’s previous estimate of 20%),” Tianfeng International Securities analyst Ming-Chi Kuo wrote in a tweet.
While the iPhone 13 and other recent Apple smartphones use Qualcomm’s X60 modem to connect to 4G and 5G networks, Apple has made strides in the wireless connectivity market. In 2019, the company bought Intel’s modem business, sparking speculation that it is developing its own parts and plans to start using them as early as next year.
Kuo, who is known for covering parts of Apple’s supply chain and making accurate predictions about suppliers before releasing products, said he expects Apple to continue developing 5G chips. Qualcomm is now diversifying its chip business from its main cellphone business into new markets including automotive semiconductors and low-power applications. Qualcomm has previously said it expects to ship 20 percent of its iPhone modems in 2023 as part of its optimistic financial forecast, suggesting to investors that the chipmaker doesn’t need Apple’s business growth.
Apple and Qualcomm have long been partners, but the relationship has also been contentious. The two companies have faced off in courts around the world over Qualcomm’s licensing fees and chip sales. Apple sued Qualcomm for $1 billion in the U.S. before the two companies signed a settlement in 2019 that included a six-year patent license agreement and an agreement to use Qualcomm components.
The chipset agreement indicates that Qualcomm will supply Apple with some, but not all, iPhone 5G modems by 2024, according to a statement of work published in court filings. An Apple representative declined to comment. A Qualcomm representative did not immediately respond to a request for comment.
Despite Tuesday’s rebound, Qualcomm shares have fallen more than 29% this year, plunging along with the rest of the tech market.
