Apple may keep using Qualcomm modem chip after potentially failing with its own: analyst
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Apple (NASDAQ:AAPL) may have "failed" with the development of its own 5G modem chip, so it is likely to keep using Qualcomm's (NASDAQ:QCOM) offerings, according to one analyst.
TF International Securities analyst Ming-Chi Kuo tweeted on Tuesday that his latest survey indicates that Apple (AAPL) was not successful with its development to replace Qualcomm (QCOM) and instead of using its own chips for modems, it will use Qualcomm for 100% of its supplies, compared to Qualcomm's (QCOM) own previous estimates of 20%.
The analyst did not say what caused the failure and Apple (AAPL) did not immediately respond to a request for comment.
Apple (AAPL) shares fell nearly 2% to $138.97 in line with the broader market, while Qualcomm (QCOM) gained more than 7% to $136.45.
The implications for Qualcomm (QCOM) are positive, in that Kuo estimates the San Diego-based tech company will "likely" beat Wall Street's estimates for the second half of 2023 and first of 2024 for both revenue and earnings.
Kuo added that he believes Apple (AAPL) will continue to develop its own 5G chips, but once it is successful enough, Qualcomm (QCOM) should not be impacted, given its other businesses will likely have grown enough to "significantly offset" the negative impact from the loss.
On Tuesday, investment firm Evercore trimmed its earnings estimates and price target on Apple (AAPL), citing foreign exchange headwinds and PC market weakness.