After Qualcomm released its quarterly report and projected weaker-than-expected profit for the current quarter, the company’s CEO told Reuters that supply constraints would cause its revenue from Apple products to decline faster than expected. Here are the details.
Qualcomm is ‘replacing Apple with data center’
Over the past few years, Apple has been moving forward with plans to replace Qualcomm-made modems with its own components, building on its 2019 acquisition of Intel’s smartphone modem business.
Qualcomm, for its part, has repeatedly sought to reassure investors that it was prepared for the loss of Apple business. Now, CEO Cristiano Amon warns that this decline will accelerate, partly because the ongoing supply constraints will leave his company with an even smaller share than expected.
In an interview with Reuters, Amon said Qualcomm “expects revenue from Apple products to decline more quickly starting in the fourth quarter as supply constraints reduce its share of components used in the next iPhone launch to well below its earlier estimate of 20%.”
He added that Qualcomm has been responding to the loss of Apple business by diversifying beyond smartphones, and expects its data center division to generate $5 billion in revenue by fiscal 2027:
“We kind of replaced Apple with the data center,” Amon said.
It is worth noting that Qualcomm’s relationship with Apple goes beyond supplying modem components. The company also earns patent-licensing royalties from Apple, which are separate from chip sales and should continue (for the time being) even as Apple moves to its own modem technology.
In 2019, the two companies settled their long-running legal dispute and signed a six-year licensing agreement. Apple later exercised an option to extend the deal by two years, meaning it now remains in effect through March 2027.
To read Reuters’ full report, follow this link.
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