Did Apple just kill Qualcomm with a paragraph?

Welcome to AI Collision 💥,

In today’s collision between AI and our world:

• Competition risk bites back
• What did Apple say in that tiny little paragraph?
• Kermit’s rugby experience

If that’s enough to get the modems dialling, read on…

AI Collision 💥

Last week we looked at some of the elder statesmen of the world’s tech scene – Dell, IBM, HP (both of them) and Intel.

Of note was how Dell has managed to adjust and adapt to the changing landscape of tech. HP, through its split, has at least kept relevant (for one half of it at least). IBM has become more of a quantum opportunity than AI (albeit that does still mean AI). And then Intel…

Intel is on the shakiest ground of them all. That’s due, in large part, to competition rising up and simply doing things better.

One company instrumental in the modern decline of Intel is Qualcomm (QCOM). Qualcomm’s rise to dominance has been solely focused on the smartphone market. As a pioneer of CDMA technology – the backbone of 3G which really saw smartphones explode into the mainstream – it’s also been ruthless in its approach to licensing technology (like that from Arm) to then develop and expand the technology.

The most notable of this was the development of its Snapdragon system-on-a-chip (SoC). Snapdragon combined the CPU and the GPU into one tight, powerful and energy efficient chip. It became the dominant chip used in Android phones and helped Qualcomm to find its Snapdragon SoC in roughly 50% of all smartphones globally.

But Qualcomm has also been a pioneer in wireless technology as well, with CDMA and 5G technologies, plus, importantly, modem technology. You’ll also find tech like its Snapdragon SoC in Android phones and its modem technology in Apple phones.

But that is all about to change thanks to an innocuous paragraph that Apple dropped on the world last week.

Buried about a quarter of the way down in Apple’s iPhone 16e press release, it revealed one of the biggest surprises we’ve seen in the semiconductor market for years.

It was low key, nonchalant and if you were skimming through the whole press release, you’d have missed it.

But this paragraph, this single, innocuous paragraph, is a sign of the changing times in the semiconductor market. It might also be the first sign of the death knell for the currently dominant Qualcomm.

So, what was it that Apple said that makes the path forward for Qualcomm look a little riskier than it did just a week before? Here’s what Apple said:

The C1, its first modem. That means Apple is replacing Qualcomm’s modem tech in its latest iPhone. Which indicates it’s also going to replace them in all modem-requiring devices going forward.

This has been around six years in the making, with well over $1 billion spent simply on getting this programme off the ground.

If you go back to 2019, Apple made an unexpected move to buy Intel’s (INTC) modem business for $1 billion. As The Verge reported at the time,

Apple will acquire “the majority” of Intel’s smartphone modem business for $1 billion, the two companies announced today. Around 2,200 Intel employees will join Apple, and Apple will acquire IP and equipment from Intel as well. The transaction is expected to close toward the end of the year.

Apple has been working on getting its own modems ready for its own phones ever since. Now the iPhone 16e is the first example we’ll see of just how well (or badly) this project has gone.

If it’s all good from here, then Qualcomm could be looking at a $10 billion hit to its revenues. The licensing agreement Apple had with Qualcomm was set to end in 2027, so that was effectively the time Apple had to get itself sorted.

Apple can now roll this out over the next couple of years to achieve a seamless transition to its own tech.

The big question is, can Qualcomm replace them? A $10 billion hit could be as much as 25% of revenues. That’s gigantic for a company like Qualcomm. And it further illustrates that companies with the available resources might be looking to wean themselves off some of these licensing deals to bring everything in house.

Add to the mix that Arm (ARM), who Qualcomm licenses its chips designs from, is considering making its own chips, and quickly you see the like of Intel and Qualcomm facing long-term competition risk.

The upside is that Qualcomm has got a good market lead, so it might not happen right away. Apple’s modem rollout will also take a couple of years. The new Qualcomm Oryon chip is said to be outstanding – so there’s a little bit of runway still. But long term? It certainly looks like there’s a changing scene in tech and some of the legacy titans like Qualcomm might be in for a rough ride.

Is this the Next “Dot-Com”’” Boom?

A new technology could be about to change the global balance of power – for the next half-century. And it’s happening 35 minutes from Oxford. This is one of the biggest financial opportunities James Allen’s ever seen.

Capital at risk

Boomers & Busters 💰

AI and AI-related stocks moving and shaking up the markets this week. (All performance data below over the rolling week).

Boom 📈

• Oddity Tech (NASDAQ:ODD) up 8%
• Team Internet Group (LSE:TIG) up 5%
• Gorilla Technology (NASDAQ:GRRR) up 0.26%

Bust 📉

• BigBear.ai (NYSE:BBAI) down 24%
• Tesla (NASDAQ:TSLA) down 13%
• Dell Technologies (NYSE:DELL) down 12%

From the hive mind 🧠

• xAI has released its updated models, as has OpenAI, Perplexity and DeepSeek. Now it’s Anthropic’s turn (it’s heavily backed by Amazon) and the company says it’s its “smartest” model yet – as we’d expect!
• What kind of jobs will AI take? How about 4,000 of them at Singapore’s largest bank?
• AI in jet fighters. What could possibly go wrong?

Artificial Polltelligence 🗳️

I’ve needed to upgrade some tech and I’m int he process of weighing up whether I stick with Apple and their products, or if I move my PC to a custom built (by me) one based off Windows.

I’m torn and don’t know what to do…

Weirdest AI image of the day

Kermit never played rugby after that ….

ChatGPT’s random quote of the day

Thanks for reading, and don’t forget to leave comments and questions below,

Sam Volkering

Editor-in-Chief

AI Collision