BofA Identified Three Risks for Apple if SpaceX Becomes a Mobile Carrier

Apple’s revenue and net income could look very different in a few years if Elon Musk’s space company, SpaceX, becomes a major player in the mobile communications market, according to Bank of America analyst Vamsi Mohan. He is quoted by Yahoo Finance. In the long run, this could weaken iPhone sales through the “Big Three” mobile carriers in the U.S., reduce demand for the iPhone due to sales of a competing device from Starlink, and create an ecosystem competing with Apple’s, linked to the AI services of Grok.

The first risk identified by BofA relates to the iPhone sales model in the U.S.: AT&T, Verizon, and T-Mobile effectively subsidize device purchases through discounts, trade-in programs, and promotional credits. According to the analyst, the three largest U.S. mobile carriers sell approximately 53 million iPhones annually, and the average discount or rebate they provide is about $800 per device. If some subscribers switch to Starlink, they may lose these benefits, which means they will upgrade their iPhones less frequently or opt for cheaper models. If 10% of the contract subscribers of the three largest U.S. carriers switch to SpaceX, Apple could lose about 5 million devices sold, or approximately $6 billion in revenue, Mohan estimated.

The second risk is the launch of SpaceX’s own smartphone. If the company releases an affordable device that’s tightly integrated with the Starlink network and Grok services, it could compete directly with the iPhone and take a share of Apple’s sales, according to Mohan. Rumors that SpaceX was developing its own gadget—a device for interacting with AI—had been circulating even before the company went public, although Musk denied them. Sources told The Wall Street Journal in July that such a phone-like device had already been developed.

“If SpaceX successfully launches an affordable smartphone based on Grok, and carriers simultaneously scale back promotional offers for their remaining customers, the impact could potentially be even greater,” Mohan wrote. “We view a potential decline in Apple’s valuation multiple as a more serious risk, as investors will begin to question the company’s ability to maintain high iPhone prices in the U.S. and the sustainability of the premium segment amid a reduction in carrier subsidies.”

The third risk is the emergence of a fully-fledged ecosystem around SpaceX that integrates smartphones, mobile communications, satellite infrastructure, and AI services. In that case, Apple would face not just a new device manufacturer, but a competitor that controls several key elements of the user experience at once—following a model that closely resembles Apple’s own approach.

However, in the near term, the launch of the Starlink mobile service could actually have the opposite effect, Mohan warns. “Carriers will likely defend their market share with more generous promotions, which will encourage consumers to upgrade their smartphones. Starlink Mobile will work with standard devices, so most subscribers who switch will keep their iPhones or buy new ones,” Mohan noted.

Late last week, Elon Musk’s space company announced the purchase of a nationwide portfolio of low-frequency spectrum. This deal gives Musk’s satellite business, Starlink, the opportunity to challenge the largest traditional U.S. mobile operators—AT&T, Verizon, and T-Mobile. However, analysts suggest that Starlink may not proceed with building ground infrastructure after all, but instead limit itself to creating a virtual network operator based on the “big three” or acquire one of the cellular carriers.

Elon Musk's next move could be to create a smartphone designed specifically to work on the Starlink network, noted Gene Munster, a technology analyst and managing partner at Deepwater Asset Management, on the social media platform X. In his view, if that happens, SpaceX would pose a threat not only to telecommunications providers but also to smartphone manufacturers.

At the same time, SpaceX has long been trying to integrate into the iPhone ecosystem. As early as 2022, Musk tried to convince Apple of the need for a partnership with SpaceX, offering Starlink as the exclusive provider of satellite communications for at least 18 months, according to the tech publication Wccftech. He requested an upfront payment of $5 billion and an annual payment of $1 billion after the exclusive period ended. Apple rejected Musk’s plans at the time, the website reports. Instead, Apple invested in the Globalstar satellite network.

In early 2025: SpaceX and its partner T-Mobile attempted to reach a cooperation agreement with Apple so that the iPhone could connect directly to Starlink satellites, several sources told The Wall Street Journal. But Apple maintains tight control over the iPhone’s software ecosystem. The companies then agreed that new smartphones would feature satellite mobile connectivity from SpaceX and T-Mobile, but through an interface fully controlled by Apple.

In 2025, the industry insider publication *The Information* reported that Starlink had added support in its new satellites for the radio frequency band that Apple uses for iPhone satellite communications—presumably with a view toward a potential partnership with the smartphone manufacturer.

This article was AI-translated and verified by a human editor