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Qualcomm (QCOM) — threat to the moat

Apple bought Intel's modem business in 2019, shipped its own in 2025, and Qualcomm's handset revenue fell a fifth in a quarter.

Apple has been Qualcomm's largest customer and its most expensive opponent for a decade, and it is now in the process of being neither.

The hole, measured$5,086Mhandset revenue,June 2026 quarter-20%year over year63%of FY2025 revenuewas handsets-50%Apple revenueguided, Sept to DecThe licence survives the defection. The chip revenue does not.
Six years of warning, delivered as a step.

The mechanics are in Qualcomm's own filing, phrased carefully: Apple purchases MDM products — thin modems, without the integrated application processor — which carry lower revenue and margin than the combined modem-and-processor parts Qualcomm sells to everyone else.1 So the largest customer was already the least profitable one. Apple shipped its own modem in 2025 and has been widening its use since.

What that costs is now visible rather than theoretical. Handset revenue fell 20% year over year to $5.09 billion in the June 2026 quarter, and management guided Apple-related revenue to decline roughly 50% between the September and December quarters.2 Fourth-quarter guidance of $9.7–10.5 billion of revenue and $2.05–2.25 of non-GAAP EPS both sat below consensus.

There is a second loss inside the first. Apple is also a QTL licensee, and the royalty on iPhones is owed whether or not Apple buys a Qualcomm chip — but the licence agreement has a term, and the last one took a court fight and a settlement to reach.3 The chip revenue is going. The licence revenue is a renewal negotiation with a counterparty that no longer needs anything.

Watch QCT handset revenue against the automotive and IoT lines together. Qualcomm has told the market it expects $40 billion of non-handset revenue by fiscal 2029. The question is only whether that arrives faster than handsets leave.

The number that tests this threat
Reported
Handset revenue, and how fast it is falling
$5,086M in the June 2026 quarter — down 20%

Apple bought Intel’s smartphone modem business in 2019, shipped its own part in 2025, and Qualcomm now guides Apple-related revenue to fall roughly 50% between the September and December quarters. Handsets were still $27,793M — 63% of fiscal 2025 revenue. The licence survives the defection because the royalty is owed on the phone whatever chip is inside; the chip revenue does not. Watch handset revenue against automotive plus IoT.

How it's calculated: The 20% decline and the segment figures are from the 10-Q; the 50% guidance is from management commentary on the Q3 FY2026 call.
Source: Qualcomm Form 10-Q, quarter ended 28 June 2026 ↗
References
  1. ReportedThe mechanics are in Qualcomm's own filing, phrased carefully: Apple purchases MDM products — thin modems, without the integrated application processor — which carry lower revenue and margin than the combined modem-and-processor parts Qualcomm sells to everyone else.
    Qualcomm Incorporated, Form 10-K FY2025 — Item 1A, Risk Factors. Market-share concentration among a few companies, and the corresponding purchasing power of these companies, may result in lower prices for Qualcomm's products, which could adversely affect revenues and margins. Apple purchases Qualcomm's MDM (thin modem) products, which do not include its integrated application processor technology and which have lower revenue and margin contributions than the combined modem and application processor products; to the extent Apple devices using MDM products take share from customers using the combined products, revenues and margins would be adversely affected. The filing also carries risk factors on customers vertically integrating by developing their own integrated circuit products, on dependence on key personnel, and on the consequences of indebtedness. — FY2025 · publ. 2025-11-05 · source ↗
  2. ReportedHandset revenue fell 20% year over year to $5.09 billion in the June 2026 quarter, and management guided Apple-related revenue to decline roughly 50% between the September and December quarters.
    Coverage of Qualcomm's third-quarter fiscal 2026 results, July 2026 — revenue of $9.9 billion and non-GAAP earnings per share of $2.21, meeting the high end of revenue guidance and short of consensus on earnings. QCT handset revenue of $5.09 billion declined 20% year over year on industry-wide memory supply constraints, higher input costs affecting device pricing and demand, and inventory adjustments at major OEMs; automotive revenue of $1.59 billion rose 61% and IoT of $1.83 billion rose 9%. Management said a sharper-than-expected reduction in Apple modem-related sales contributed to a lighter fourth-quarter outlook, with Apple-related revenues expected to fall by approximately 50% between the September and December quarters, and doubled the fiscal 2029 non-handset revenue target to $40 billion. Fourth-quarter guidance was $9.7-10.5 billion of revenue and $2.05-2.25 of non-GAAP diluted EPS, both below consensus near $10.02 billion and $2.36. — Q3 FY2026 · publ. 2026-07-30 · source ↗
  3. ReportedApple is also a QTL licensee, and the royalty on iPhones is owed whether or not Apple buys a Qualcomm chip — but the licence agreement has a term, and the last one took a court fight and a settlement to reach.
    Qualcomm Incorporated, Form 10-K FY2025 — Item 7, Management's Discussion and Analysis, and the reportable-segment note. QCT revenues $38,367M (2024 $33,196M, 2023 $30,382M) with EBT of $11,670M ($9,527M, $7,924M) at 30% of revenues (29%, 26%); QCT revenue streams handsets $27,793M ($24,863M, $22,570M), automotive $3,957M ($2,910M, $1,872M) and IoT $6,617M ($5,423M, $5,940M). QTL revenues $5,582M ($5,572M, $5,306M) against total costs and expenses of $1,539M ($1,545M, $1,678M), for EBT of $4,043M ($4,027M, $3,628M) — 72% of revenues in each of the three years. Reportable-segment revenues $43,949M, $38,786M and $35,716M against consolidated revenues of $44,284M, $38,962M and $35,820M. During the second quarter of fiscal 2025 Qualcomm executed final agreements for new long-term licensing arrangements. — FY2025 · publ. 2025-11-05 · source ↗
Sources
Generated September 23, 2026