Qualcomm beats Q2 expectations, but cuts forecast on Apple's strength and Samsung's move to own chips in Galaxy S6
Ina Fried / Re/code :
Context & Ripple Effects
The beat-and-cut follows an already rough start to the year for Qualcomm's chip unit: in January it had warned its Snapdragon 810 dropped from a flagship device and cut its outlook. Now the two biggest phone makers are both pulling volume away — Samsung is putting its own silicon in the Galaxy S6 instead of Qualcomm parts, and Apple's strong iPhone sales shrink the pool of premium Android handsets that would have bought Snapdragon.
What makes this cut notable rather than routine is who is causing it: not soft overall demand, but design wins lost at the very top of the market, where margins are richest.
First-order effects
- Samsung's move to in-house chips in the Galaxy S6 removes Qualcomm components from the highest-volume Android flagship, directly cutting Snapdragon unit shipments this cycle.
- Apple's iPhone strength compounds the loss: every sale to iOS is a premium handset that was never going to carry a Qualcomm app processor, tightening the addressable high-end market further.
Second-order effects
- Losing the S6 socket puts immediate pressure on Qualcomm to win back Samsung's next flagship — a fight the related coverage shows it later won with a Galaxy S7 chip deal that restored operating income growth.
- With chip volumes under pressure at the top end, Qualcomm's licensing business becomes proportionally more important to earnings, raising the stakes when disputes like the later Apple patent battle threaten exactly that revenue stream.
Third-order effects
- If Samsung's insourcing proves successful, other large OEMs face a template for designing their own silicon, structurally shrinking the merchant chip market for flagship phones and concentrating what remains on mid-tier devices.
- The pattern points toward Qualcomm's fortunes splitting into two businesses — a competitive chipset unit fighting for sockets and a patent-licensing unit whose legal exposure increasingly drives the stock, as the 2017–2018 results show.
The trend: Top smartphone makers are insourcing their own chips, steadily eroding merchant vendors' share of flagship sockets and shifting Qualcomm's earnings center of gravity toward licensing.