Qualcomm Shares Slip as Apple Exposure and Memory Costs Weigh on Sales

Qualcomm's shares are under pressure from two directions at once, and both threaten its sales outlook.

The first is Apple. For years, Apple has been one of Qualcomm's most important customers, supplying modem chips that connect iPhones to cellular networks. Apple has been building its own modem technology, and investors are concerned that a growing share of iPhone orders will move away from Qualcomm. For a company that depends heavily on handset makers, losing a customer of that size would be a significant blow.

The second pressure is broader and affects the whole phone market. Higher memory costs raise what manufacturers pay to build each device. Those costs can be passed on to buyers as higher prices, or absorbed by makers in ways that squeeze their margins. Either path tends to slow smartphone demand. Fewer phones sold means fewer processors and connectivity chips shipped, and Qualcomm sells those components to Android manufacturers as well as Apple.

The two problems compound each other. The Apple concern is specific to Qualcomm, while the memory squeeze hits the entire industry, so Qualcomm has less room to offset one by gaining ground elsewhere.

The available summary does not give the size of the share decline or any new guidance figures from the company. Readers who want to judge how serious the situation is should check Qualcomm's latest earnings release and filings for its revenue exposure to Apple and its forecast for handset demand.