After Qualcomm released its quarterly report and projected weaker-than-expected earnings for the current quarter, the company’s CEO said 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 a data center”
In recent years, Apple has moved forward with plans to replace Qualcomm-made modems with its own componentsbased on your acquisition 2019 of Intel’s smartphone modem business.
Qualcomm, for its part, has repeatedly tried to assure investors that it was prepared for the loss of Apple’s business. Now, CEO Cristiano Amon warns that this decline will accelerate, in part because current supply constraints will leave his company with an even smaller share than expected.
In an interview with ReutersAmon said Qualcomm “expects revenue from Apple products to decline more rapidly starting in the fourth quarter as supply constraints reduce its share of components used in the upcoming iPhone launch to well below its previous estimate of 20%.”
He added that Qualcomm has been responding to the loss of Apple’s 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’s worth noting that Qualcomm’s relationship with Apple goes beyond supplying modem components. The company also wins royalties from patent licenses from Apple, which are independent of chip sales and should continue (for now) even as Apple moves to its own modem technology.
In 2019, the two companies established their long legal dispute and signed a six-year licensing agreement. Apple then exercised an option to extend the agreement by two years, meaning it will now remain in force until March 2027.
read Reuters‘full report, follow this link.
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