Apple Inc. is mulling whether to build new wireless phones and tablet computers without electronic components from Qualcomm Inc., the Wall Street Journal reported on Oct. 31, citing unnamed sources.
The devices would need chips from Intel Corp. and possibly MediaTek, the Journal reported.
Shares of Qualcomm (Nasdaq: QCOM) lost 6.7 percent of their value on the day of the news, closing at $51.01.
One of the sources reportedly told the business newspaper that Qualcomm stopped sharing software that would allow Apple (Nasdaq: AAPL) to test its chips in prototypes of the iPhone and iPad.
A Qualcomm media relations representative offered no comment other than the same statement the company gave the Wall Street Journal: “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 consistent with our support of all others in the industry. Qualcomm’s wireless solutions remain the gold standard for premium tier smartphones.”
The statement was in response to the question, “Is Apple designing Qualcomm out of the next-generation iPhones because Qualcomm is not giving Apple access to software to test the modem in iPhones?”
Qualcomm and Apple are involved in a legal battle over the amount of royalties Apple must pay Qualcomm. The latter is also facing accusations of unfair competition in several markets around the world. Qualcomm has previously said it believes Apple is behind those complaints.
The news comes on the eve of Qualcomm’s fourth quarter earnings announcement, when executives are expected to update shareholders regarding its dispute with Apple. Qualcomm executives will also touch on how and when the San Diego company will wrap up its acquisition of NXP Semiconductors N.V.
As part of the dispute with Apple, Apple’s contract manufacturers are withholding payments to Qualcomm.
Apple still has until June to make up its mind about chip suppliers for its next-generation iPhone and iPad, the unnamed sources told the Wall Street Journal.
Abandoning Qualcomm would present risks for Apple. Qualcomm has demonstrated faster download speeds than Intel and MediaTek, a semiconductor analyst said.
Also on Oct. 31, Qualcomm made a major announcement about plans to test cellular technology for autonomous vehicles in San Diego County, saying the tests will begin before the end of the year. Qualcomm’s partners in the effort include AT&T, Ford, Nokia and Vista-based McCain.