Shares of Qualcomm Drop Amid Reports that Apple Might Drop Its Chips

On Tuesday morning, Qualcomm’s shares dropped about 6.5% after reports signalled more trouble between Apple and the chipmaker.

It was reported by the Wall Street Journal that the tech giant was designing products for 2018 that would not include components of Qualcomm, relying instead on chips from Intel, and potentially, MediaTek. Two unidentified sources informed Reuters that the designs of Apple for fall 2018 could eliminate Qualcomm components.

Shares of Intel grew 3% in Tuesday morning trading.

Qualcomm heavily invested in mobile technology ahead of rivals including Intel, and as a result, Qualcomm’s semiconductors power many major high-end smartphones. Still, it is not uncommon for companies to look for multiple suppliers.

However, Apple and Qualcomm are also in the middle of a legal dispute over the way that Qualcomm distributes its technology.

Apple sued Qualcomm for approximately $1 billion earlier in 2017, saying that the chipmaker has been “charging royalties for technologies they have nothing to do with.” The tech giant claims that Qualcomm charges the company “at least five times more in payments than all the other cellular patent licensors …. combined,” and that the chipmaker has been withholding payments from Apple.

Qualcomm has dismissed the claims of Apple as groundless. In turn, Qualcomm has requested international regulators to prevent imports of some iPhones until Apple continues paying for the use of the patents.

Qualcomm refused to comment regarding the speculation on whether Apple is considering not including Qualcomm in the next-generation of iPhones.

However, when asked whether Qualcomm is providing Apple access to software to test the modem in iPhones, a spokesperson stated: “The Qualcomm modem that could be used in the next generation iPhone has already been fully tested and released to Apple. We are committed to supporting Apple’s new devices.”