The most interesting investment question in Apple’s supply chain right now is not which processor goes into the next iPhone, it is who gets paid for the modem. For years that answer has been Qualcomm, which collects a royalty on essentially every iPhone sold. Apple has been trying to change that answer for a decade, and the result is finally shipping inside devices.
What Apple is actually building
The effort is real and it has shipped. Apple bought the core of Intel’s smartphone modem business in 2019, and the internal program it built on top of that deal is codenamed “Prometheus.” The first Apple-designed modem, called the C1, launched inside the iPhone 16e in early 2025, and a second-generation chip has followed since. Apple has said it wants to move its entire product lineup onto its own modem silicon over time, the same play it ran with its A-series and M-series processors. A modem is a harder part than a processor in some ways, because it has to pass carrier certification in every country where the phone sells, but the direction of the program is no longer in doubt.
The margin math
The reason this matters to investors is that the money is large and recurring. Qualcomm’s modem revenue from Apple is measured in billions of dollars a year, and much of it flows as royalty and licensing income that drops almost straight to the bottom line. If Apple insources the modem, that payment stream shrinks for Qualcomm and the savings land inside Apple’s own gross margin. Apple’s motivation is partly margin and partly control: owning the modem frees it from Qualcomm’s roadmap and patent terms. For Qualcomm, the loss of even part of the Apple business is a multi-year headwind to its most profitable segment.
The timeline is longer than the teaser implies
The catch is that none of this is binary or fast. Apple is likely to phase its own modem across models and price tiers over several years, keeping Qualcomm inside some products while it proves out the rest, and keeping the transition measured rather than abrupt. A teaser that promises an immediate windfall is compressing a multi-year engineering program into a single catalyst date. The reality is that modem transitions are incremental: a lower-volume model first, then broader adoption, then eventual full insourcing. Investors should price the trend, not a single announcement. The gap between a multi-year engineering schedule and a one-day catalyst is where most of the promotional hype lives.
The supplier question
That brings us to the supplier angle. A recent Paradigm Press promotion from James Altucher points investors at a small company it describes as an “Apple supplier” that will benefit from this shift, and the name the clues point toward is Ceva Inc., a Maryland firm that licenses signal-processing and connectivity intellectual property to chipmakers. The argument is that modems need signal-processing blocks, and Ceva is one of the firms that licenses that kind of design. It is a reasonable thesis to investigate, but it is not a confirmed Apple contract, and a design win is not the same as a revenue windfall. We unpack that distinction in our piece on Ceva’s IP licensing model. The modem-shift mechanics themselves, including what losing Apple means for Qualcomm, are covered in our Qualcomm modem explainer. And for how these chip themes fit a broader portfolio view, see our AI chip stocks piece.
Why this changes the supplier map
Insourcing does not remove suppliers, it swaps them. When Apple buys a modem from Qualcomm, it buys a finished part, and Qualcomm’s own supply chain is invisible to Apple. When Apple designs the modem itself, it needs a different set of inputs: intellectual-property blocks for the signal-processing portions, a foundry to manufacture the chip, and test and assembly partners. That is the opening the teaser is pointing at. A firm like Ceva Inc., which licenses signal-processing and connectivity IP, is exactly the kind of small supplier that can pick up a slice of an Apple-designed modem without ever shipping a physical chip to Apple. The nuance is that these slices are measured in cents per unit and are not guaranteed, because Apple can source signal-processing blocks from several licensors or design them in house. For context, the signal-processing slice of a modem is worth a few cents per chip, while the finished modem Qualcomm sells runs to many dollars per unit. Investors who read “Apple supplier” as “Qualcomm-sized windfall” are importing the old economics into a new, smaller role, and that is the single biggest misunderstanding in the whole modem story.
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