Qualcomm forecasts to supply 20% of 2023 iPhone modems as Apple to launch own chips

• Qualcomm is expecting strong revenue growth primarily due to strong demand for Android smartphones

• The chipmaker expects Apple to make up only a “low single-digit” percentage of the chip sales by 2024

Qualcomm Inc on Tuesday said that it is preparing for the launch of Apple Inc’s own modem chips, which will cut into Qualcomm’s modem business starting in 2023.

Smartphone processor maker Qualcomm expects to supply just 20% of Apple’s modem chips in 2023, which currently supplies radio-frequency front-end chips paired with modem chips for all iPhones.

Although Apple has been working on in-house modem chips for years now, after acquiring Intel Corp’s modem unit in 2019 for $1 billion, Qualcomm did not say whether it believes the iPhone maker self-supply all of the smartphone modems or whether it might turn to other vendors.

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Qualcomm CFO Akash Palkhiwala at an investor conference on Tuesday, said that the company believes its phone chip revenues will expand in line with broader phone markets despite losing 80% modem supply to Apple.

Palkhiwala said the company expects Apple to make up only a “low single-digit” percentage of the company’s chip sales by the end of fiscal 2024.

Forecast

The chipmaker’s revenues hit $27 billion this year, among which $10 billion came from sources other than smartphone handsets.

The company believes that, excluding Apple sales, its revenue growth in handsets will grow faster than the overall market, thanks primarily to strong demand from Android device makers.

“We’re no longer defined by a single end market and a single customer relationship,” Cristiano Amon, Qualcomm CEO, said.

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“The assumption we use for this forecast is that for Apple 2023 launch, our share is down to 20%. This is a planning assumption for the forecast purposes. Just to be clear, there is no new data point that makes us do this forecast versus our discussions in the past. We just wanted to set a base for this forecast, and so we’ve used that as a planning assumption.”

While Amon said Qualcomm would have a future chance to compete to sell those chips to Apple regardless of where Apple sources its modem chips, he also mentioned that those potential deals are not included in the forecasts.

Picture Credit: CNBC