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Qualcomm stock downgraded ahead of Apple’s first custom modem

MacDailyNews

Oct 8

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Qualcomm stock was downgraded Tuesday by a KeyBanc analyst over concerns that Apple will create its own modem. Analyst John Vinh downgraded shares of Qualcomm to Sector Weight from Overweight without a price target on Tuesday.

Angela Palumbo for Barron’s:
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One of the main reasons Vinh recommends investors stay on the sidelines is because of Apple. Qualcomm currently builds the modem chips that the iPhone maker uses in its smartphones. In September 2023, Qualcomm announced that it entered into an agreement with Apple to supply its modem systems for smartphone launches in 2024, 2025, and 2026.
However, there have been reports that Apple is looking to create its own modem.
“Our supply chain work has confirmed that Apple will begin to ramp its internal modem in stages over the next several years,” Vinh wrote in a research note. That could be a problem for Qualcomm, which reported in its most recent 10-K Securities filing that in fiscal 2023, revenue from Apple and Samsung each comprised 10% or more of consolidated revenue… [H]e expects the “full impact of the modem coming out will represent a $1.55-$1.65 EPS headwind to earnings.”

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MacDailyNews Take: It’s way past time that the old extortionist Qualcomm gets some comeuppance. Hopefully, it’s at least as painful as it deserves!

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