>> Apple could ditch long time chip supplier Qualcomm. Two people familiar with the matter telling Reuters Apple has designed iPhones and iPads without the Qualcomm chips. That news immediately hitting Qualcomm stock. Down about seven percent on Tuesday. Sources say the Qualcomm chip free iPhones will be released in the Fall of 2018.
But Apple could still change course before then. Reuter's reporter Steven Nellis.>> Apple wants to drop Qualcomm because Qualcomm is expensive to use. It's not just the cost of the chips, it's a licensing agreement that Qualcomm also makes you sign if you wanna use their chips that charges you a percentage of the total cost of the phone.
The percentage of the phone's cost that Qualcomm takes is really hitting Apple hard now because there are many more expensive parts in the iPhone X. The screen is more expensive, the face id sensor is more expensive. All of those things put pressure on the margin of the iPhone X.
So anything Apple can do to shave a few percentage points off the cost, like addressing these licensing fees are in Apple's favor in terms of getting the margins back up on that flagship product.>> Analysts estimate Qualcomm has just over 50% of the share of modem chips in iPhones.
That would represent less than a tenth of the chip maker's 2016 revenue of over $23 billion.>> So Qualcomm has long seen this coming in the mobile chip market and they've started to look for new areas. So NXP semiconductors, a company that they're buying, is the biggest semiconductor deal ever and it would launch Qualcomm into new markets like the automotive market which is rapidly expanding.
Now the issue is this deal faces a lot of regulatory scrutiny, especially in Europe where Qualcomm's already had to make some concessions to European regulators to satisfy their anti-trust concerns.>> But Qualcomm's bad news is good news for Intel, which also supplies chips to Apple and analysts said could benefit from this change.
Intel rose over 2% on Tuesday.