Get a new order! Qualcomm announces a three-year agreement with Apple on chip supply
On the evening of September 11th, Qualcomm Technologies announced that it had reached an agreement with Apple to provide Snapdragon 5G modems and RF systems for smartphones launched in 2024, 2025, and 2026.
Affected by the news, Qualcomm's US stock rose nearly 7% before trading, but the subsequent increase narrowed. As of the close, Qualcomm's per share report was $110.28, up 3.90%.
Smartphone processor chips bear the heavy responsibility of competing for the discourse power of the new generation of mobile terminals, but are constrained by multiple factors such as technology and market. Currently, only Qualcomm, Samsung, MediaTek, and Spreadtrum are able to participate in the competition globally. In the high-end chip market, mobile phone manufacturers have almost no choice but to become flagship phones.
A Qualcomm engineer previously told reporters that advanced process technology can accelerate the iteration of Apple's self-developed chips, while promoting the competitiveness of downstream terminals. More importantly, the discourse power in the downstream market can enable Apple to obtain better resources in the upstream supply chain, and do better in product differentiation and user experience. At the same time, self-developed chips can also reduce costs and impose a "dimension reduction blow" on other mobile phone manufacturers in terms of terminal product prices.
Previously, Qualcomm mainly provided 5G modems for Apple's iPhone, but in order to break away from its dependence on Qualcomm chips, Apple acquired Intel's smartphone modem division and began building its own modems in 2019.
Qualcomm has stated that by 2023, Apple's procurement of baseband chips from Qualcomm will decrease to 20% of its demand. Apple will start using internally developed 5G modems from 2024. But according to the information released by Qualcomm this time, the time for Apple to fully use its self-developed products will be postponed.
In the industry's view, the reason why Apple has postponed its self-developed chip plan may be related to the overall environment. In terms of the market environment faced by mobile phone chips, the "cold winter" has not yet passed.
On August 3rd, Qualcomm's stock fell nearly 9% to $118.19 before trading. The day before this, Qualcomm released its third quarter report for the fiscal year 2023 as of June 25. Based on non US GAAP accounting standards, Qualcomm achieved revenue of $8.442 billion, a decrease of 23% year-on-year; The net profit was $2.105 billion, a year-on-year decrease of 37%.
The company expects its fourth quarter sales to reach $8.1 billion to $8.9 billion, lower than analyst expectations.
Currently, Qualcomm is taking measures to reduce expenses while investing in new products to promote the implementation of artificial intelligence on smartphones. But due to the weak market, the company has started to reduce the number of employees.
Qualcomm CEO Cristiano Amon said in a conference call, "We hold a conservative view of the market and will actively take additional cost measures to ensure that Qualcomm is in a favorable position to create maximum value for shareholders in an uncertain environment."
"Although we are developing a plan, we currently expect these actions to mainly include layoffs, and related to such actions, we expect to incur significant additional restructuring costs," the company said.
After the financial report was released, Qualcomm's stock price fell by 7% in after hours trading on the US stock market that day.
From the perspective of core business, 5G mobile phone chips are an important support for Qualcomm's performance, but in the past two years, global mobile phone sales have stagnated in growth.
According to data released by Counterpoint, global smartphone sales in the second quarter of 2023 decreased by 8% year-on-year and 5% month on month. This has been the eighth consecutive quarter of a downward trend in the global smartphone market.
According to the business data released by Qualcomm, the sales of Qualcomm mobile chips decreased by 25% to $5.26 billion, which had the most direct impact on the company's performance decline. Although the automotive business has seen double-digit growth, it only accounts for about 5%, which is still a gap from the 50% share of the mobile chip business.
