Austin, Texas, USA, March 14, 2025
Futurum Makes the Case for Why Qualcomm’s Accelerating Diversification Strategy Will More Than Compensate for Apple’s Modem Exit
Olivier Blanchard, AI Practice Lead at Futurum, said, “Apple looks to be on track to make good on its plans to equip all of its iPhones with its very own line of new in-house cellular modems just as its licensing agreement with Qualcomm is slated to end in 2027. But while Apple’s exit from Qualcomm’s modem business could blow a $7B hole in Qualcomm’s annual revenues starting in 2028, the strength and pace of Qualcomm’s expansion into adjacent segments – primarily Automotive, IOT, and the IIOT – should more than make up for the loss of iPhone’s business.”
The recent release of Apple’s in-house C1 modem is a critical milestone on its cellular modem roadmap, and a good indicator of where Apple is in its product development timeline. As one of Qualcomm’s largest cellular modem customers, Apple’s exit from that agreement is expected to create a >$7B annual revenue hole in Qualcomm’s balance sheet. Will Qualcomm be able to mitigate this loss by 2028, and if so, how?
The report reveals several key points about how Qualcomm will brush off the revenue hit:
- Qualcomm’s annual modem revenue from sales to Apple is estimated to be between $5.7 and $5.9B, with an additional $1.6 to $1.9B from RF components and other subsystems. Apple’s complete exit from Qualcomm’s modem-RF business would, therefore, result in a $7.3B to $7.8B annual revenue shortfall for Qualcomm starting in 2028.
- Qualcomm’s diversification efforts into the Automotive, IOT, and IIOT space are already paying off: The automotive and IOT segments, which are on track to grow at 28.1% and 26.6% by 2028, respectively, are expected to account for 49% of Qualcomm’s total modem revenue by 2030.
- Moreover, it is unlikely that Apple will be able to challenge Qualcomm’s lead in cellular modem innovation anytime soon. If Qualcomm’s latest X85 modem-RF system’s specs and performance are any indication, Apple’s modem design team is still years behind the cellular modem giant.
“Qualcomm’s leadership in cellular modem-RF innovation and position in the market shouldn’t be impacted at all by Apple’s efforts to develop in-house modem capabilities,” explains Blanchard. “Modem-RF design, especially in the era of 5G, is an extremely complex endeavor, and while what Apple has already accomplished in a very short time is impressive, it will realistically take Apple a decade or more to truly catch up to Qualcomm.”
Apple’s two primary objectives here are to decouple from another component supplier and pursue deeper system integrations for its modems. These objectives suggest that Apple’s modem gambit is purely an Apple ecosystem and supply chain play rather than a competitive exercise against Qualcomm modems. The significance of this is that, aside from the $7B loss in annual revenues that Qualcomm will have to mitigate, the competitive dynamics of the cellular modem market should remain mostly unchanged, particularly in the Android space.
Subscribers can read more in the report “How Will Apple’s In-House Modem Strategy Ultimately Impact Qualcomm?” available on the Futurum Intelligence Platform. Non-subscribers, click here for more inquiry and access.
About Futurum Intelligence for Market Leaders
Futurum Intelligence’s AI Devices IQ service provides actionable insight from analysts, reports, and interactive visualization datasets, helping leaders drive their organizations through transformation and business growth. Subscribers can log into the platform at https://app.futurumgroup.com/, and non-subscribers can find additional information at Futurum Intelligence.
Follow news and updates from Futurum on X and LinkedIn using #Futurum. Visit the Futurum Newsroom for more information and insights.
Other insights from The Futurum Group:
Apple Launches the iPhone 16e: A Budget Game-Changer or an Overpriced Entry Model?
Why The New AI-Enabled Pixel 9 Lineup Is Google’s Strongest Play Against Apple Yet
Qualcomm Supplying Apple With Snapdragon 5G Modem-RF Systems Into 2026
Author Information
Research Director Olivier Blanchard covers edge semiconductors and intelligent AI-capable devices for Futurum. In addition to having co-authored several books about digital transformation and AI with Futurum Group CEO Daniel Newman, Blanchard brings considerable experience demystifying new and emerging technologies, advising clients on how best to future-proof their organizations, and helping maximize the positive impacts of technology disruption while mitigating their potentially negative effects. Follow his extended analysis on X and LinkedIn.
