Qualcomm Shares Dip as Apple Plans to Phase Out Chip Partnership
Qualcomm shares dropped nearly 5% in pre-market trading on Thursday, as investors reacted to news that Apple will soon stop using Qualcomm’s modem chips. Despite a strong quarterly outlook, the expected loss of its largest customer has sparked concerns about future revenue.
The chipmaker, based in San Diego, confirmed that Apple plans to shift to its own in-house modem technology, starting with the launch of the iPhone 16e in February. This move marks a major shift that could significantly impact Qualcomm’s earnings in the coming quarters.
Apple Exit and Tariff Risks Add Pressure
Qualcomm is now pivoting its strategy, focusing more on growth areas such as data centres, personal computers, and augmented reality. However, fresh concerns over potential US tariffs are adding to the uncertainty.
Former President Donald Trump has recently threatened new tariffs on semiconductors, which analysts warn could disrupt global supply chains. Although smartphones and chips are not yet included in the levies, Trump’s warning that semiconductor tariffs are “coming soon” has sparked worry in the sector.
Qualcomm’s Chief Financial Officer, Akash Palkhiwala, noted that the company has not yet seen a rush in orders to get ahead of potential tariffs. Analysts estimate that such duties could reduce handset revenue by mid-single digits.
Still, Michael Ashley Schulman of Running Point Capital pointed out that Chinese manufacturers continue to rely heavily on Qualcomm’s Snapdragon chips for 5G and AI-driven marketing worldwide.
Strong Android Sales and Augmented Reality Growth
Despite the Apple setback, Qualcomm reported that sales to non-Apple customers have grown more than 15% this fiscal year. The rise is mainly due to new premium Android launches.
Analysts from TD Cowen highlighted strong partnerships with Samsung and Xiaomi, calling them crucial for maintaining Qualcomm’s share in the handset market.
The company is also investing in augmented reality. CEO Cristiano Amon said Qualcomm now supports 19 AR designs, including Meta’s Ray-Ban smart glasses, and expects this number to increase.
Competitive Valuation in Semiconductor Market
Qualcomm’s stock is currently trading at a 12-month forward price-to-earnings ratio of 13.36. This is lower than major competitors, including Nvidia at 34.91, Intel at 47.14, and AMD at 35.33, based on LSEG data.
As Qualcomm navigates the upcoming transition away from Apple and potential geopolitical risks, it continues to seek growth in emerging tech sectors while strengthening ties with Android partners.
with inputs from Reuters
