Yesterday Qualcomm forecast sales revenue for the holiday shopping quarter below analysts’ estimates as it took a hit from the loss of chip sales to Apple, sending its shares down 3.1 percent after hours.
Reuters is reporting that "Apple excluded Qualcomm from its new iPhones XS and XS Max and XR that launched in September, instead choosing modem chips from rival Intel. Although Qualcomm warned its shareholders earlier this summer that Apple would likely make that move, the impact has shown up more swiftly than Wall Street expected.
Qualcomm Chief Financial Officer George Davis told Reuters that about half of Apple’s chip purchases tended to come during the holiday quarter. Davis said Wall Street analysts may have expected the blow from the Apple loss to be more spread out over the year.
Davis added: 'Our guidance has a reduction of over 50 million (chip) units in the quarter, all of that explained by the absence of being in Apple phones. That’s really the difference.'"
Earlier on Wednesday, Reuters reported that Apple is not in talks 'at any level' to settle the litigation with Qualcomm, according to a person familiar with the matter. Davis said there was “a lot of focus both internally and externally” on resolving the dispute with licensees, which include Apple, but did not comment on whether the two were in talks about a settlement.
Qualcomm is just lucky that their Chinese customers Xiaomi, Vivo and OPPO have done so well or the pain would have been much worse.
Analysts also know that Qualcomm's 5G modem business in 2009 will likely offset the lack of chip sales to Apple. But for now, Qualcomm's pain from the loss of Apple's business is real.
The preliminary ruling handed down by Judge Koh in the FTC case against Qualcomm this week was another setback for Qualcomm who said during their conference call that "settlement talks with the FTC are proceeding despite the ruling.