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Apple has designed iPhones and iPads that would drop chips supplied by Qualcomm Inc according to two people familiar with the matter, Reuters reports. The change would affect iPhones released in the fall of 2018, but Apple could still change course before then, these people said. They declined to be identified because they were not authorized to discuss the matter with the media.

The dispute stems from a change in supply arrangements under which Qualcomm has stopped providing some software for Apple to test its chips in its iPhone designs, one of the people told Reuters. The two companies are locked in a multinational legal dispute over the Qualcomm’s licensing terms to Apple.

 

Qualcomm told Reuters it is providing fully tested chips to Apple for iPhones. “We are committed to supporting Apple’s new devices consistent with our support of all others in the industry,” Qualcomm said in a statement. The Wall Street Journal first reported that Apple could drop Qualcomm chips Monday.

 

Bernstein analyst Stacy Rasgon said Apple’s move is not totally unexpected. Looking ahead, it’ll be interesting to see how the ongoing Apple-Qualcomm saga unfolds. From the looks of it, neither company appears ready to concede even an inch, which may ultimately result in yet another blockbuster legal battle down the line.

 

Apple has eliminated companies from its supply chain before and, to put it mildly, things never work out well for those companies. Qualcomm certainly has other clients, but losing any business from Apple would obviously have huge implications.

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