Apple’s (AAPL) efforts to replace Qualcomm (QCOM) as a supplier of 5G modem chips for its iPhone have run into a development problem, a prominent Apple stock analyst said on Tuesday. Qualcomm shares rose to the news.
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In a Twitter thread, TF International Securities analyst Ming-Chi Kuo said it looks like Apple has “failed” in the internal development of a 5G modem chip. That means Qualcomm will continue to be the exclusive supplier of modem chips for iPhone 5G during the second half of 2023, he said. Qualcomm had previously estimated that it would only supply 20% of these iPhone chips by the end of 2023.
Apple did not respond to a request for comment on the report.
“I think Apple will continue to develop its own 5G chips,” Kuo said. “But when Apple is successful and can replace Qualcomm, Qualcomm’s other new business should have grown enough to significantly offset the negative impacts caused by the loss of iPhone 5G chip orders.”
Qualcomm stock jumps
The development is likely to boost Qualcomm’s revenue and earnings estimates for 2023 and early 2024, Kuo said.
On the stock exchange today, Qualcomm shares rose 3.5% to close at 131.60. Shares of Apple fell 3% to 137.44 on a general day of stock declines.
Qualcomm is shifting its business from making wireless chips primarily for smartphones to making them for a number of Internet of Things devices. This includes chips for cars, Arm-based computers, and virtual reality and augmented reality headphones.
Qualcomm’s existence ranks fifth out of the 33 shares of IBD’s unreliable semiconductor industry group, according to IBD Stock Checkup. It has an IBD composite rating of 72 out of 99. The IBD composite rating combines five separate property classifications into one easy-to-use classification. The best growth stocks have a composite rating of 90 or better.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software, and semiconductor stocks.
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