Qualcomm and Apple had a long and “nasty” legal battle before both companies eventually resolved. The former has been supplying the latter with 5G modems that it has used for its two generations of 5G iPhones. However, Qualcomm is now preparing for life after Apple because Apple will launch its own modem chips soon. According to reports, Apple’s modem chips will decimate Qualcomm’s modem business from 2023.
Yesterday, there was an Investor Day event where Qualcomm CFO, Akash Palkhiwala, revealed that in 2023, Qualcomm will lose 80% of modem chips it supplies to Apple. This means that Qualcomm expects to supply just 20% of Apple’s modem chips. Considering this report, Qualcomm has just next year to supply 5G modem chips to Apple. For the iPhone 12 series and iPhone 13 series, Qualcomm has enjoyed a modem monopoly.
Over the past few years, Apple has been developing its own modem chips. According to speculations, Apple modems will be officially available in 2023. Qualcomm’s expectation is that by 2023, it will technically lose Apple as a customer. Popular Apple analyst, Kuo Ming-Chi earlier predicted that Apple’s 5G baseband chips will be ready for 2023 iPhones.
Certainly, Apple will not use its own baseband chips in all regions. The company will still rely on Qualcomm’s 5G modems in iPhones for certain areas. According to Qualcomm, this is just a “planning assumption for forecast purposes,”. However, it appears that the company is optimistic that Apple’s 5G modem will launch in 2023.
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.
Before the launch of the iPhone 12 series, Apple and Qualcomm had a tough legal battle because Apple wanted to use Intel’s 5G modem. Unfortunately, Intel did not meet Apple’s expectations at the time. After months of legal tussles, both companies settled their dispute as Apple had no other option. Since the company had no other alternative for the 5G modem, it had to accept a multi-year partnership with Qualcomm. However, Apple did not see Qualcomm as a long-term option because it commenced work on its in-house modem.
To boost Apple’s quest for its in-house modem chips, Apple had to purchase Intel’s chip modem business.