What's Up With Apple: iPhone Sales Forecast, Leaving Qualcomm, and More

iPhones account for just over half of Apple Inc.’s (NASDAQ: AAPL) revenue. The December quarter is typically when iPhone sales (and Apple revenue) peak. In the December 2020 quarter, iPhone sales totaled $65.6 billion (about 59% of the company’s total) and analysts’ estimated unit sales ranged from around 82 million to more than 90 million. (Apple does not reveal unit sales.)

Daniel Ives, an Apple analyst at Wedbush, estimates that Apple could sell more than 80 million iPhones this quarter. AppleInsider cites Ives’s comments from a note to investors:

Despite the chip shortage and Rubik’s Cube logistics that Apple (and every other technology, auto, and retail vendor) is dealing with we are seeing tremendous demand trends both in the US and China for iPhone 13 which is a positive sign that Apple could exceed selling 80 million iPhone units in the quarter with stronger Pro versions driving higher ASPs [average selling prices].

Ives recognizes that supply chain constraints are lengthening delivery times, but he believes demand is 15% higher than the available supply. He expects Apple to sell 40 million iPhones between Black Friday and Christmas, a record number for the traditional holiday shopping season.

While Apple is famous for its secretiveness, on one product issue it has been quite clear. The company plans to replace modem chips it currently sources from Qualcomm with modem chips of Apple’s own design. This is not good news for Qualcomm Inc. (NASDAQ: QCOM). Apple is one of Qualcomm’s largest customers. For its 2021 fiscal year that ended in September, Qualcomm identified Apple, Samsung and Xiaomi as the three customers each accounting for at least 10% of Qualcomm’s total revenue.

In an Investor Day presentation Tuesday, Qualcomm Chief Financial Officer Akash Palkhiwala said that the company would supply only 20% of Apple’s modem chips in 2023, and chip sales to Apple would dwindle into the low single-digit range by the end of fiscal 2024.

To replace the lost business, Qualcomm expects to supply chips to the auto market and the metaverse (i.e., augmented reality and virtual reality hardware). According to CEO Cristiano Amon, Qualcomm also will compete to sell Apple the front-end RF chips that are paired with device modem chips. In a sense, Qualcomm expects Apple’s success in selling iPhones to drive the market for Android-based phones and result in additional sales for Qualcomm.

Briefly noted:

At the Global Conference for Mobile Application Ecosystem Fairness in Seoul, Epic Games CEO Tim Sweeney took another shot at Apple’s App Store policies:

Apple locks a billion users into one store and payment processor. Now Apple complies with oppressive foreign laws, which surveil users and deprive them of political rights. But Apple is ignoring laws passed by Korea’s democracy. Apple must be stopped.

Sweeney also had some comments on the Google Play store. Neither Apple nor Google commented.

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