Qualcomm predicts it will supply only 20% of modems for 2023 iPhone

Qualcomm and Apple have had a rocky relationship, but with Apple actively investing in creating its own modems, it seems Qualcomm knows its days are numbered as a major modem supplier for the iPhone. In an investor event, the chip maker revealed that it thought Apple will only supply 20% of the modems it needs for the smartphone in 2023 from Qualcomm.

The chip maker didn't specify where the remaining 80% of modems would come from, be it from Apple's own production or from other suppliers, reports Reuters.

Apple and Qualcomm reached a modem licensing deal in April 2019, ending a high-stakes patent licensing trial in the process. As part of that deal, there was also a multi-year chipset supply agreement and a six-year license agreement.

Within months, in July 2019, Apple signed a billion-dollar deal to acquire the majority of Intel's cellular modem patents, IP, and key personnel, effectively buying the remains of Intel's modem business. With the assets, Apple is thought to be working on its own design of 5G baseband chips, which could be incorporated into future iPhone models by 2023.

The reduced supply to Apple won't be damaging to Qualcomm, the company believes. By the end of fiscal 2024, Qualcomm CFO Akash Palkhiwala expects Apple to make up a "low single-digit" percentage of its revenue.

With the exception of Apple sales, Qualcomm thinks revenue growth in smartphones will grow faster than the market at large, due to partnerships with vendors such as Xiaomi, Oppo, and Vivo. "We're no longer defined by a single end market and single customer relationship," said CEO Cristiano Amon.

That's not to say that Apple won't use Qualcomm as a supplier, with Amon adding that there's always a chance of supplying radio-frequency front-end chips to the iPhone maker in the future. However, those potential sales were not included in Qualcomm's forecasts.

Qualcomm is also not defined just by smartphones, as $10 billion of its $27 billion revenue for the year stemmed from other markets. Qualcomm has also signaled an intention to take on Apple Silicon in PC system-on-chips, with its first chips potentially arriving at vendors within nine months.