According to Reuters, Qualcomm, Inc. (NASDAQ: QCOM) fell over 7% Monday as Apple, Inc. (NASDAQ: AAPL) may drop the company for Intel Corporation (NASDAQ: INTC) to supply the chips for Apple’s next generation of iPhones. Qualcomm has supplied Apple components for years but had an issue last year when Apple blamed Qualcomm of overcharging the price of their chips and their refusal to pay $1 billion in rebates.
Nomura Instinet, renowned brokerage, claimed in a note that Apple has choice of a handful of chip suppliers for their iPhones that may be more cost efficient. “There is speculation that Apple might drop Qualcomm altogether for its next generation phones and I think that’s part of the reason the stock is down today,” said Angelo Zino, an analyst at CFRA Research.
Nomurai analyst, Romit Shah stated that Apple can save over $100 million in the next iPhone production cycle by switching to Intel’s cheaper modem chips. Qualcomm was previous charged with a $1.23 billion fine by European Union regulators that accused the company of paying Apple to use only its chips to prohibit competitors from producing chips for Apple’s iPhone.