Apple’s “chip dream” evaporates Qualcomm 85 billion. Who will be the next supplier to be eliminated?

Apple also has to rely on its suppliers through this era, and those technologically advanced chip makers will sustain their leading role for a longer period of time.

By now the chip makers supplying Apple should have learnt the lesson, that is, never accept this enterprise as a permanent company. The new example is Intel. Eventually, Apple replaced Intel processors in its Mac computers with self-developed chips. The chip dream of Apple has worried its vendors, fearing that they will become the next to be eliminated.

The next goal could be Qualcomm. Johny Srouji, Apple’s senior vice president of hardware technology, recently revealed that the company is designing its own modem chip, according to sources. The biggest market between Qualcomm and Apple is modem chips, and after years of prolonged legal battles, the two firms have recently re-established their relationship.

In early trading on Friday, the news caused Qualcomm’s stock price to plunge 7 percent, evaporating 85 billion $US in market cap overnight. It also appears to be overshadowed by other well-known Apple providers, such as Broadcom, Qorvo and Skyworks. These firms mainly provide the iPhone with RF components. Broadcom stock dropped nearly 2 percent in early trading, amid the company’s solid fourth-quarter performance posted late Thursday.

Citi analyst Atif Malik predicts that, considering that these components would work closely together, Apple is likely to consider using open source RF chips after building its own modem.

But even for Qualcomm, the pain of being replaced by self-developed products from Apple still takes a long time to experience. Sludge said Apple’s modem efforts, which he termed a “long-term strategic investment.” had just started this year.

A six-year license deal and a “multi-year” chip supply agreement was included in the arbitration agreement signed between the two parties last year. A crucial factor in facilitating this settlement is Qualcomm’s apparent lead in 5G technologies, and this is not an environment where Apple can catch up easily.

UBS analyst Tim Arcuri (Tim Arcuri) pointed out that more skills in radio frequency technology would be needed for Apple’s “mandatory modem proliferation” and the company may have to acquire these technologies through mergers and acquisitions.

Apple is ambitious and financially powerful, and it is well known that it wants to control as much of its main technology as it can. This is a challenge faced by every chip company with this tech giant that is doing business. But these efforts did not happen overnight: it took ten years to introduce a viable PC chip after Apple created the first chip for the iPhone.

Apple also has to rely on its suppliers through this era, and those technologically advanced chip makers will sustain their leading role for a longer period of time.