Apple’s Custom Modem Plans Challenge Qualcomm’s Billion-Dollar Revenue, While Chipmaker Pursues Growth in Automotive, IoT, and Emerging Markets

Apple is strategically moving away from Qualcomm as it advances its custom modem technology, with the existing agreement set to expire in March 2027. Following the release of Apple’s highly praised C1 chip, which outperformed Qualcomm’s modems in independent tests, Qualcomm is already recalibrating its business strategy. In a recent interview, the CEO of Qualcomm expressed a more subdued outlook regarding the impact of Apple’s transition to its custom modems.

Qualcomm CEO Addresses Apple’s Departure: Focusing on Diverse Growth Opportunities

Apple’s shift to its own modem technology poses a significant threat to Qualcomm’s revenue, especially given the staggering number of iPhones sold annually, each reliant on Qualcomm’s modems. The introduction of the iPhone 16e, equipped with the custom C1 modem, amplifies the likelihood that Apple will completely phase out Qualcomm’s offerings. Predictions suggest that Apple will conclude its partnership with Qualcomm in early 2027, leading to all future devices incorporating Apple’s proprietary connectivity chips.

In an appearance on Yahoo Finance’s Opening Bid podcast, Qualcomm’s CEO, Cristiano Amon, assessed the situation, asserting that Qualcomm is positioning itself to thrive beyond its relationship with Apple. He stated that exploring new markets and technologies will enable Qualcomm to offset the potential decline in revenue from their long-standing partnership.

“That’s our contract, you know, and if we don’t get a new contract, that’s what it is, ”Amon said.“And there’s so much drama and association about the Apple relationship, which I think is not warranted, to be honest.”

Historically, Qualcomm has been a significant supplier to Apple, yielding annual revenues between $5.7 billion and $5.9 billion. However, projections indicate that Qualcomm’s share of the iPhone modem market could plummet; from an expected 70% this year to merely 20% next year, ultimately dwindling to zero by 2027. In light of this shift, Qualcomm is pivoting to emerging markets such as automotive technologies, Internet of Things (IoT) innovations, and AI-driven server chips to remain competitive against industry players like Nvidia.

Qualcomm anticipates that its modems will diminish in Apple’s future products, particularly as Apple develops the next-generation C2 modem, expected to offer superior connectivity features. Notably, the C1 modem is anticipated to feature in the upcoming ultra-thin iPhone 17 Air, set to launch this September. Moreover, Apple is reportedly designing MacBooks that will integrate its proprietary modem technology, but specifics regarding these products are currently limited. The full extent of Qualcomm’s potential losses as Apple achieves self-reliance in modem technology will become clearer in the years ahead.

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