The high demand for iPhone 12 with 5G network support has proven to be beneficial for Qualcomm. A report by TrendForce states that the high demand for Qualcomm 5G modems and RF chips, due to iPhone 12’s popularity, increased the manufacturer’s earnings in Q3 2020. Now Qualcomm stands at number one spot in the revenue ranking of global top 10 IC design companies for the aforementioned quarter.
Apple has used Qualcomm’s X55 5G modem in the new flagship iPhone 12 line-up which offers faster downloads and uploads speeds, a more responsive gaming experience, FaceTime video calling in HD, higher quality video streaming, and more. Apple states that,
Featuring the most 5G bands on any smartphone, iPhone 12 models offer the broadest 5G coverage worldwide. Models in the US support millimeter wave, the higher frequency version of 5G, allowing iPhone 12 to reach speeds up to 4Gbps, even in densely populated areas. iPhone 12 models also feature Smart Data mode, which extends battery life by intelligently assessing 5G needs and balancing data usage, speed, and power in real time.
5G iPhone 12 models boost Qualcomm 5G modems sales
The report states that with a 37.6% YoY increase, Qualcomm’s third-quarter 2020 earnings hit $4.967 billion which landed the manufacturer in the number one position on the top 10 list. TrendForce details that monetary success is attributed to a number of factors:
First, Qualcomm returned to Apple’s supply chain earlier this year; second, its OEM clients had been aggressively procuring components due to the COVID-19 pandemic; and finally, 5G RF components gradually began contributing to Qualcomm’s revenue.
Second-ranked Broadcom recovered from its YoY revenue declines, which had lasted for six consecutive quarters, and registered $4.626 billion in quarterly revenue in 3Q20, a 3.1% increase YoY, primarily due to the increased demand for cloud, wireless, and networking products. In addition, being a chip supplier for the iPhone 12 allowed Broadcom to largely shrug off the impact of the China-U.S. trade war.
Furthermore, the investigation revealed that the manufacturing industry survived the current COVID-19 pandemic and the U.S and China trade war and grew because of demand “for data center, networking, and notebook products rose on account of WFH and distance education applications.” For Q3 2020, Nvidia on number 3 spot saw a 55.7% YoY increase due to Mellanox’s networking chips, AMD revenue hit $2.801 billion with a 55.5% YoY increase because of its notebook, desktop, gaming console, and data center. Realtek and Novatek revenues increased by 40% YoY.
However, Dialog and Xilinx were the only companies that saw a decline in revenues in Q3 2020 due to the U.S and China trade war. The report further added that,
Furthermore, concerns about potential supply chain disruptions compelled OEM clients to aggressively procure components. Looking ahead to 2021, TrendForce analyst C.Y. Yao believes that fabless companies will raise their prices to ensure a sufficient supply of upstream foundry capacities, in light of the extreme capacity shortage across the foundry industry, as well as future uncertainties with the trade war and the pandemic. For the most part, the global fabless revenue is expected to maintain an upward trajectory next year.
In the future, Qualcomm might be competing with Apple in 5G modems. A recent report claims that Apple has begun building its own cellular modem for LTE and 5G modems and it will replace Qualcomm’s cellular modems in upcoming iPhones and iPad.
The two companies are already audio and computer chips; Qualcomm’s new chips for earbuds are speculated to give AirPods Pro a run for its money and Alex Katouzian, Qualcomm SVP, and general manager for mobile, compute, and infrastructure said that Snapdragon processor will outperform M1 Apple Silicon Macs and will also bring 5G and high-quality cameras to Windows laptops.
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