Apple to Launch Cellular Modem Chips

(Reuters) – Apple (NASDAQ:AAPL) is preparing to launch its long-awaited series of cellular modem chips next year, which will replace components from longtime partner Qualcomm (NASDAQ:QCOM), Bloomberg News reported on Friday.

The iPhone maker aims to ultimately overtake Qualcomm's technology by 2027, according to sources familiar with the matter.

Qualcomm, a leading designer of modem chips that connect phones to mobile data networks, has warned investors that Apple will eventually stop using its chips.

The chip designer has secured a deal to keep selling chips to Apple until at least 2026. Investors are keen to see if Qualcomm's push into laptops and AI-powered data centers can accelerate quickly enough to offset potential revenue drops from Apple.

Apple's new component is expected to feature in the iPhone SE, the company's entry-level smartphone slated for an update for the first time since 2022 next year. This will be followed by further generations of increasingly advanced chips.

Qualcomm did not immediately respond to Reuters' request for comment, while Apple declined to comment.

Apple has been investing in its own modem technology and spent $1 billion to acquire Intel's modem unit in 2019.

In early 2019, Reuters reported that Apple moved its modem engineering efforts into the same chip design unit that makes custom processors for its devices, signaling a commitment to self-designed modem chips.

Last year, Apple signed a multi-billion-dollar deal with chipmaker Broadcom (NASDAQ:AVGO) to develop 5G radio frequency components. Such a deal could negatively impact companies like Skyworks Solutions (NASDAQ:SWKS) and Qorvo (NASDAQ:QRVO), both of which are Apple suppliers.