(Reuters) - Shares in Qualcomm Inc (QCOM.O) fell as much as 8 percent on Tuesday after reports that Apple Inc (AAPL.O) would not use its modem chips in iPhones and iPads from next year.
Qualcomm has been a supplier of components to Apple for years but the relationship took a bad turn earlier this year when Apple accused Qualcomm of overcharging for chips and refusing to pay some $1 billion in promised rebates.
The change would affect iPhones released in the fall of 2018, but Apple could still change course before then, two people familiar with the matter told Reuters on Monday.
Shares of Intel Corp (INTC.O) — which analysts have said would benefit the most if Apple switches vendors — rose 3.2 percent and hit a 17-year high on Tuesday.
Analysts have estimated Qualcomm to have just over 50 percent of the share of modem chips in iPhones, with Intel making up the rest.
“Qualcomm’s share represents about $1.5-1.75 billion in annual revenue,” Raymond James analyst Chris Caso said.
That estimate is less than a tenth of Qualcomm’s 2016 revenue of $23.55 billion, and under 5 percent of Intel’s annual revenue of nearly $60 billion.
The share of Intel’s modem chips in the iPhone could approach 100 percent within the next two years, rapidly shrinking losses in the chipmaker’s mobile phone business, Baird Equity analyst Tristan Gerra said.
Qualcomm’s shares were down 6.7 percent at $50.99 in midday trading on Tuesday.
Apple’s shares rose 1.3 percent to a record high after reviewers gave an overwhelmingly positive verdict for the iPhone X.