Investing.com -- Qualcomm, a fabless chip design company focused on mobile and smartphone processors, faces a difficult year as weaker handset demand and rising competition threaten its core market.

Seaport analyst downgraded the stock to Sell from Neutral, citing the “incredible shrinking TAM”

Higher memory prices are likely to slow smartphone demand, which could reduce shipments of devices that use Qualcomm chips.

Global phone volumes are expected to fall 10%–15% this year as manufacturers either raise prices or cut specifications such as memory, extending upgrade cycles and depressing demand.

Seaport said the pressure could hit Qualcomm’s customers particularly hard, weakening the company’s position even as the total market it serves contracts.

Though Apple could gain share in the smartphone market. While many Android handset makers are lowering memory content or cutting prices, Apple has kept memory levels and pricing unchanged in its latest devices, giving it an advantage as memory costs rise.

Apple also continues efforts to remove Qualcomm components from its devices. Seaport said Qualcomm could be largely excluded from Apple’s models starting next year as the iPhone maker develops its own silicon.

The brokerage added that Qualcomm’s strongest recent performance has come from high-end Android phones, a segment it expects to face the greatest pressure this year.

Rising costs and stronger competition from Apple could lead to discounted chip sales and lower royalty rates for Qualcomm.

Lower-end Android devices could also shift demand toward rival chipmakers such as MediaTek if handset makers in China prioritize cheaper models, potentially forcing Qualcomm to cut prices further.

Qualcomm faces longer-term risks as major smartphone makers increasingly develop their own processors and modems. The five largest handset vendors already design their own application processors, while several are working on in-house modems, including Samsung Electronics.

While this shift has been gradual, Seaport said the risk to Qualcomm’s core mobile market is rising as its addressable market continues to shrink.