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Apple to Keep Qualcomm Chips in 2023 in Turnabout

Apple to Keep Qualcomm Chips in 2023 in Turnabout

(Bloomberg) -- Qualcomm Inc. will continue to provide the modem chips for the “vast majority” of iPhones in 2023, a turnabout for a company that had expected to lose the business to Apple Inc.’s homegrown components.

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Qualcomm had planned to only provide about 20% of the 5G modem parts for the new iPhones in 2023, but now expects to retain its current foothold, according to comments that accompanied its earnings report Wednesday. The statement confirmed that Apple won’t be moving to its own in-house modem design for next year’s models.

Since settling a lawsuit with Qualcomm in 2019 and agreeing to use that company’s technology inside iPhones for the foreseeable future, Apple went to work on building its own cellular modem, Bloomberg News has reported. Apple’s chip development chief told staff in 2020 that development of the part was underway.

But earlier this year, Bloomberg News reported that Apple’s efforts have been stymied by prototype versions of the modems overheating and that the company wouldn’t begin a switch until 2024 at the earliest. Qualcomm continues to assume it will only receive minimal revenue contributions from Apple in fiscal 2025.

Apple didn’t immediately respond to a request for comment.

The reprieve provided little comfort to Qualcomm investors Wednesday. The company is grappling with a broader slump in smartphone demand and delivered a far weaker forecast than expected. The shares slid as much as 8.4% in late trading.

--With assistance from Ian King.

(Updates with company continuing to assume minimal revenue from Apple in 2025.)

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