5G iPhones Pack New Surprise for Qualcomm

Instead, Apple turned its event into a full-throated embrace of 5G. It gave particular attention to the variant known as millimeter wave, or mmWave, which delivers the highest speeds but is also sharply limited in range and availability. All of the new iPhones will be compatible with mmWave standard, even though Verizon VZ -0.94% is the only U.S. carrier using it extensively.

That has made the iPhone 12 launch into a valuable commercial for Verizon; Apple even had the carrier’s chief executive, Hans Vestberg, on stage for the event. But a company that stands to benefit even more in the near term is Qualcomm, which makes the modem chips that connect smartphones to their networks. In a report Monday, Susquehanna analyst Christopher Rolland wrote that mmWave handsets bring an extra $18 a device to Qualcomm. He estimates this will drive an additional $350 million to Qualcomm’s revenue for its fiscal year that ends in September 2021.

That adds further to the strong boost the chip maker already was expected to see from the new iPhones. Qualcomm had been shut out of the Apple business for the last few iPhone generations due to a bitter legal battle between the companies, but Apple’s need for 5G helped drive a settlement between the two last year. That should be reflected in Qualcomm’s latest financial results due for release on Nov. 4.

Analysts currently expect the company’s chipset revenue to jump 27% year over year for the fiscal fourth quarter ended in September, with a 60% surge projected for the December quarter. Those estimates haven’t budged since last week’s iPhone unveiling, which should leave Qualcomm some room for a surprise of its own.

Write to Dan Gallagher at [email protected]