From Dan Gallagher’s “Apple’s Chip Dreams Haunt Its Suppliers” ($) in Saturday’s Wall Street Journal:
Chip makers supplying Apple should have learned by now to always consider that business temporary. That doesn’t mean it’s worthless.
Intel is only the most recent example, finally losing its place in some of the Mac computer lineup to in-house central processors developed by Apple. Qualcomm might be next on the chopping block. Apple’s senior vice president of hardware technologies, Johny Srouji, told employees in a company town hall Thursday that Apple is working on its own modem chips, according to a report by Bloomberg. Modem chips are Qualcomm’s largest business with Apple, with the two companies having recently re-established their relationship following a bitter, multiyear legal dispute.
The news took down Qualcomm’s share price by 7.4% Friday. It also seemed to hang over other prominent Apple suppliers such as Broadcom (-1.03%), Qorvo (-3.59%) and Skyworks Solutions (-4.33%). All supply radio frequency, or RF, components used in the iPhone. Broadcom shares were down 1% in morning trading despite the company having reported strong results for its fiscal fourth quarter late Thursday. Atif Malik of Citi predicted that Apple would likely look to in-source RF chips after it develops its own modem, given how tightly those components have to work together.
But even for Qualcomm, the pain of being replaced by Apple is still some way off—if it happens at all.
My take: Go ahead, bet against Apple. See what happens.