Qualcomm shares down 3 per cent over reports of Intel chips in iPhones

Shares of Qualcomm fell 3 per cent yesterday after two brokerages said Apple Inc will replace the chipmaker with Intel for the modem chips in its next generation of iPhones.

Qualcomm has been supplying components to Apple for years but the relationship soured last year when Apple accused Qualcomm of overcharging for chips and refusing to pay some $1 billion in promised rebates.

Brokerage Nomura Instinet said it anticipated that Apple would drop Qualcomm in favour of a number of other suppliers, in its bid to cut materials costs for iPhones.

Nomura said it believed Apple would source all of its thin modems, of which Qualcomm supplied half, from Intel.

''There is speculation that Apple might drop Qualcomm altogether for its next-generation phones and I think that's part of the reason the stock is down today,'' said Angelo Zino, an analyst at CFRA Research.

According to Nomura analyst Romit Shah, Apple would save over $100 million in the next iPhone cycle by moving to cheaper Intel modem chips.

He added that Broadcom Ltd, which is eyeing  Qualcomm, is likely to lose $400 million worth of sales of Apple parts in the second half of the year to Qorvo Inc.

Meanwhile, according to KGI Securities analyst Ming-Chi Kuo, Intel could be the exclusive supplier of LTE modems for all new iPhones launched in 2018.

MacRumors reported the following as key takeaway from the research not it obtained:

''We expect Intel to be the exclusive supplier of baseband chip for 2H18 new iPhone models, while Qualcomm may not have a share of the orders at all.''

Kuo had earlier projected Intel supplying 70 per cent of the modems, with Qualcomm providing the remaining 30 per cent of orders, but he now believes Intel will be the sole supplier, as it enjoys several competitive advantages.