What Does The Intel-Apple Deal Imply For Qualcomm?

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According to reports, Apple’s next version of the iPhone used on AT&T’s network will feature Intel’s modem integrated circuit instead of Qualcomm. Though Intel is posing a major threat to Qualcomm’s chipset business, this news shouldn’t be a big surprise for Qualcomm’s investors. This is because it had long been rumored that Qualcomm might lose some of its orders from Apple to Intel. Further, Qualcomm’s chipset business is not as profitable as its licensing business, so losing some chipset orders shouldn’t change Qualcomm’s overall profitability much. Below we take a look at the impact this development could have on Qualcomm’s chipset revenues:

QCOM_INTEL_APPLE_Q&A

(1) – Source – Bloomberg

(2) – Source – Apple Insider. (We assume a similar price trend for Apple baseband chips in 2016 and 2017)

Note: We have assumed the revenue in 2016 and 2017 to be same as in 2015.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Qualcomm

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