Which of Apple’s suppliers could benefit or suffer?
Starlink Mobile could challenge Apple’s (NASDAQ) iPhone sales model by disrupting the subsidy system provided by U.S. wireless carriers; however, analysts at Bank of America believe the impact on earnings will likely be limited in the short term.
In a research note dated October 12, analysts led by Wamsi Mohan examined how SpaceX’s expansion into mobile communications might affect Apple’s pricing strategy and sales of premium smartphones.
SpaceX recently reached an agreement to acquire a nationwide portfolio of 800 MHz spectrum from Grain Management, building on a previous spectrum purchase from EchoStar—a deal valued at approximately $17 billion.
The company has also received regulatory approval to deploy a constellation of 15,000 satellites, along with the authorization to provide mobile services independently, without needing to partner with a terrestrial wireless carrier.
The analysts identified three potential risks for Apple: the disruption of carrier subsidy programs, competition from a hypothetical smartphone developed by SpaceX, and the potential integration of services from Tesla, SpaceX, and Grok AI.
Approximately 53 million iPhones are sold annually through the three largest U.S. wireless carriers, with an average subsidy of about $800 per device.
Which carriers are most dependent on iPhone subsidies?
These subsidies sustain demand for premium models and encourage customers to upgrade their devices regularly.
According to the study’s estimates, if 10% of subscribers from major carriers were to switch to Starlink Mobile, it could cost Apple roughly five million in iPhone sales and $6 billion in revenue. However, a more significant concern relates to the valuation of Apple’s stock—specifically, whether a reduction in subsidies could undermine the company’s pricing strategy in the U.S. iPhone market and dampen demand for premium devices.
Analysts also pointed to potential upside for Apple.
Existing mobile carriers might initially bolster their loyalty programs to retain subscribers, which would, in turn, support demand for iPhone upgrades.
Which carriers are already strengthening their loyalty programs to retain subscribers?
Since Starlink Mobile is compatible with existing smartphones, customers switching to the new network can continue using their iPhones rather than purchasing devices from competitors.
Apple could also expand direct sales through its own retail stores and financing programs; furthermore, lower consumer spending on mobile service plans could free up funds for purchasing devices and subscribing to the company’s services.
No material competitive impact is expected until fiscal year 2028, given the pace of SpaceX’s infrastructure rollout and the need for additional regulatory approvals.
Bank of America maintains a “Buy” rating on Apple stock with a price target of $370, citing the potential for AI-enabled devices and consistent returns for shareholders.
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