Selling Qualcomm: Apple’s Shift to In-House 5G Modems Raises Concerns

Introduction

As a financial analyst, it is my duty to provide recommendations based on thorough research and analysis. Today, I reiterate a ‘Sell’ rating on Qualcomm, one of the leading semiconductor companies in the world. My decision is influenced by the potential impact of Apple’s rumored shift to in-house 5G modems, which could significantly affect Qualcomm’s future growth prospects.

Qualcomm’s Current Position

Despite reporting strong Q4 results and unveiling a new $15 billion stock repurchase authorization, Qualcomm faces a looming threat from Apple’s modem development. The company’s Snapdragon 8 Elite and AI PC market growth offer some potential upsides, but the risk posed by Apple’s transition cannot be ignored.

Potential Impact on Qualcomm

I believe that Apple’s decision to develop its own 5G modems could lead to a 3% reduction in Qualcomm’s revenue from FY26 to FY28. This could have a significant negative impact on Qualcomm’s overall financial performance and market position.

How This Will Affect Me

As an investor in Qualcomm, the potential shift by Apple to in-house 5G modems raises concerns about the company’s long-term profitability and growth. It is important for me to closely monitor any developments in this space and adjust my investment strategy accordingly.

How This Will Affect the World

The impact of Apple’s move towards in-house 5G modems goes beyond just Qualcomm. It could disrupt the semiconductor industry as a whole and potentially lead to a shift in the competitive landscape. Consumers may also see changes in the availability and pricing of 5G-enabled devices in the market.

Conclusion

In conclusion, while Qualcomm has shown resilience and innovation in the face of challenges, the threat posed by Apple’s potential transition to in-house 5G modems cannot be overlooked. As such, I stand by my ‘Sell’ rating on Qualcomm and advise investors to proceed with caution in the coming months.