Qualcomm Says Apple Modem Revenue Will Fall Faster Than Expected

Qualcomm says revenue from Apple will decline faster than previously expected as supply constraints reduce its share of components in Apple's next iPhone launch to well below the company's earlier 20 percent estimate. CEO Cristiano Amon told Reuters the decline will begin in the fourth quarter as Apple continues its years-long effort to replace Qualcomm's modem chips with its own in-house technology.



Apple has been steadily expanding the use of its in-house modem, which now powers the iPhone 16e, iPhone 17e, and iPhone Air. Even as Apple reduces its reliance on Qualcomm chips, Qualcomm will continue collecting patent-licensing royalties through at least March 2027 under the companies' existing agreement.


Beyond the Apple transition, Qualcomm also plans to raise prices beginning September 1 to restore margins after rising costs across its supply chain. "We're just passing through big cost increases that we have," Amon said, adding that the increases are not limited to memory chips and will be negotiated with individual customers.

As that business shrinks, Qualcomm is increasingly relying on AI data centers and other non-handset markets for growth. "We kind of replaced Apple with the data center," Amon said. The company is targeting $5 billion in AI data-center revenue by fiscal 2027 and $15 billion by 2029. Qualcomm's chief financial officer, Akash Palkhiwala, said growth in automotive and other non-handset businesses is expected to replace all Apple-related revenue from fiscal 2026. By fiscal 2027, the company expects most of its chip sales to come from categories other than smartphones.

Qualcomm's third-quarter handset revenue fell 20 percent to $5.09 billion, though it still topped analyst estimates. The company forecast fourth-quarter adjusted earnings of $2.05 to $2.25 per share, below the $2.36 consensus estimate, sending shares down more than 4 percent in extended trading. Qualcomm said handset makers' price increases have pushed buyers toward lower-priced premium phones and older models, weighing on margins.