Qualcomm Braces for a Breakup with Apple as Modem Deal Nears End

Qualcomm (QCOM) is gearing up for a major shift as its multi-billion-dollar modem chip deal with Apple (AAPL) nears expiration. With signs pointing to Apple moving its modem production in-house, Qualcomm is preparing for life without its biggest and often most demanding customer. The looming split marks a pivotal moment for the chipmaker as it doubles down on diversification and future-proofing its business.

Qualcomm Looks Beyond Apple

In an interview on Yahoo Finance’s Opening Bid podcast, Qualcomm CEO Cristiano Amon revealed that the company is operating under the expectation that Apple will end its modem supply agreement after 2027. Amon also stated that Qualcomm is witnessing strong growth in other parts of its business, particularly in markets like Android, which continues to drive excitement and momentum for the company.

To make up for the decline in sales from Apple, Qualcomm is ramping up investments in connected car cockpits and the Internet of Things (IoT) sector. The company projects these areas could grow its revenue to $22 billion by 2030, compared to $8.3 billion in fiscal 2024.

End of an Era?

Qualcomm has long been Apple’s main supplier of cellular modems, but Apple is shifting to its own in-house C1 modem to improve profit margins. Research firm Futurum estimates that Qualcomm earns between $5.7 billion and $5.9 billion annually from modem sales to Apple.

Qualcomm has publicly stated that it expects to supply modems for about 70% of iPhones launching this fall. However, that share is projected to fall to 20% for iPhones released next fall and eventually drop to zero for models debuting in fall 2027.

Despite this, Amon minimized any notion of conflict between the two tech giants, stating that the “association about the Apple relationship…is not warranted.”

Is Qualcomm a Buy, Hold, or Sell?

On TipRanks, QCOM stock has a consensus Moderate Buy rating among 17 Wall Street analysts. That rating is based on eight Buys, eight Holds, and one Sell assigned in the last three months. The average Qualcomm stock price target of $177.75 implies a 19.2% upside from current levels.

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