Apple-Qualcomm News Shakes These 7 Stocks

QUALCOMM, Inc. QCOM saw a strong move to the downside on a Wall Street Journal report that said Apple Inc. AAPL is planning to lock the former's products out of its products.

Qualcomm is a manufacturer and licensor of chips. The company's licensing business is supposed to be a higher margin one than its manufacturing business. Apple has started using chips made by Intel Corporation INTC for its iPhones after its five-year exclusivity deal with Qualcomm ended in 2016.

Qualcomm supplies baseband or modem chips to Apple — chips in a network interface that allows making calls and access internet on mobile devices such as smartphones and tablets.

However, Qualcomm is still very much in the scheme of things for iPhones, given the royalties it charges chipmakers which supply chips to Apple.

In January this year, Apple filed a lawsuit against Qualcomm in the San Diego federal court, contending that the latter charges at least five times more royalties than other cellular patent licensors combined.

Qualcomm had refuted the charges then, stating that Apple's claims were baseless and that Apple had intentionally mischaracterized its agreements and negotiations, as well as enormity and value of its technology.

Citing people familiar with the matter, the Wall Street Journal report said Apple would leave out Qualcomm's components from its iPad and iPhone next year.

Instead, Apple is looking at using modem chips from Intel and possibly Taiwan-based MEDIATEK INC MDTKF.

See also: For Qualcomm, It's What's Outside That Counts: Business Dynamics Overshadowed By Apple Litigation, NXP Merger

The immediate trigger for the move, according to the Journal, has been Qualcomm withholding the software needed to test chips in prototypes. However, the Bloomberg said, quoting Qualcomm, the Qualcomm modem that could be used in the next generation iPhone has already been tested and released to Apple.

Qualcomm has been the pioneer and frontrunner in the mobile chip technology, giving it an edge over the others that have forayed into the space.

Here are some of the chip stocks that are on the move on the Apple-Qualcomm spat:

• Qualcomm, being at the receiving end, is down 7.24 percent at $50.70.
• Investors seem to have lapped up the potential Apple move, sending its shares up by 1.19 percent to $168.70.
• Intel, which could be a direct beneficiary, is seeing its stock trade up by 2.17 percent at $45.33.
• Advanced Micro Devices, Inc. AMD, which could secure an Apple tie-up is up 2.16 percent at $11.12. Incidentally, AMD shares have been on a downward trajectory since the release of its third quarter results on Oct. 24, losing about 24 percent over four sessions.
• NVIDIA Corporation NVDA is adding 1.49 percent to $206.89.
• Apple supplier Skyworks Solutions Inc SWKS is trading up 1.57 percent at $113.76.
• Universal Display Corporation OLED is jumping 7.54 percent to $149.05 amid the Apple news and a broker upward price target revision.