We have a sad news for the investors that Apple which is one of the tech giants is dropping Qualcomm as a chip supplier for new iPhone models coming out this year. Apple and Qualcomm are fighting a legal war over patent fees. Qualcomm has already given financial guidance in January that excluded cellular modem chip sales to Apple for new iPhone Models so, this news was not a surprise to the investors.
New iPhone Models will not contain Qualcomm Chips
During its earnings conference call this week, Qualcomm made the loss of Apple’s business official. While discussing this issue the Chief Financial Officer George Davis told the analysts that:
“We believe Apple intends to solely use our competitor’s modems rather than our modems in its next iPhone release”
He further added that:
“We will continue to provide modems for Apple legacy devices.”
Apple has declined to comment on it because both companies are embroiled in a fierce courtroom battle over patent royalties. As Qualcomm was overcharging for the patents so, Apple has stopped paying Qualcomm for its intellectual property. Apple has shaved about $500 million per quarter in patent licensing revenue from Qualcomm over the past year.
Apple is the second largest seller of smartphones worldwide, shipping 216 million devices last year. Ditching Qualcomm is also a great risk for Apple from the marketing standpoint. According to Ookla speed test app, Qualcomm’s latest Snapdragon 845 chips powering new Android phones have beaten Intel’s modems in a variety of speed tests. So, ditching such powerful chips will not be a good option.
Sravan Kundojjala, a market consultant with industry research firm Strategy Analytics revealed that:
“While the loss of Apple is likely to hit Qualcomm’s modem volume to some extent, it is unlikely to hurt its revenue significantly”
It will be a great risk as well as a challenge for the tech giant, Apple to make their upcoming phones stand first in the market without affecting the company’s revenue after ditching Qualcomm chips.
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