Shares of Qualcomm (NASDAQ:QCOM) have fallen today, down by 8% as of 12:05 p.m. EST, following a Bloomberg report that Apple (NASDAQ:AAPL) has officially started to work on its in-house cellular modem. Qualcomm just started selling modem chips to Apple for the iPhone 12 lineup following a bitter two-year legal battle.
Apple's chip chief Johny Srouji told employees in an internal town hall meeting that the company had "kicked off the development of our first internal cellular modem" earlier this year, according to the report. The Cupertino tech giant had acquired the remnants of Intel's modem business last year for $1 billion, which was the clearest sign yet of Apple's plans. That purchase included a team of engineers to jump-start the efforts, according to Srouji.
Apple was forced to settle its legal complaints with Qualcomm last year in order to secure 5G modems from Qualcomm after Intel failed to deliver a viable component, which is how this year's iPhone 12 models all have 5G support.
It's unclear when Apple's in-house modem will be ready to ship. Prior rumors suggested that the company may look to use its own modem in next year's iPad Pro, but other speculation has pegged 2022 as the year that Apple will make the switch.
Apple is one of four customers that each contribute at least 10% of Qualcomm's revenue, according to regulatory filings. Bloomberg estimates that the Mac maker represents 11% of the mobile chip specialist's top line.