Tue. Sep 26th, 2023
Apple Extends Deal with Qualcomm to Supply 5G Modems for iPhones

Apple has announced an extension of its deal with Qualcomm to supply 5G modems for its smartphones. This indicates that Apple is still facing difficulties in perfecting the technology in-house. Since 2018, Apple has been trying to develop modems for its iPhones as part of its ongoing effort to reduce reliance on external suppliers. Qualcomm revealed that it will provide its chips for Apple’s smartphone launches in 2024, 2025, and 2026. Although the specific terms of the agreement were not disclosed, Qualcomm confirmed that they are similar to the original deal struck in 2019.

As Qualcomm’s largest customer, Apple constitutes approximately 25% of the chipmaker’s revenue. It was anticipated that the iPhone 15, which is set to launch on Tuesday, would be one of the last iPhones to depend on Qualcomm’s modems. The relationship between the two companies has not always been smooth, with various intellectual property and contract disputes. However, in 2019, they reached a resolution and entered into a multiyear chipset supply agreement.

While Apple had previously acquired Intel’s smartphone chip business for $1 billion to accelerate its modem development plan, the new deal with Qualcomm suggests that Apple may incorporate its own modems into its smartphones within the next three years if they are ready. Qualcomm stated that it expects to supply 20% of the relevant chips for the smartphone launch in 2026 based on its long-term financial planning assumption.

Apple’s in-house project, known as Apple Silicon, has delivered impressive results in developing core processors for the iPhone. Recently, Apple has also transitioned its Macs to use these chips, replacing Intel as the primary workhorse in its desktop and notebook computers.

Following the announcement, Qualcomm’s shares experienced an initial surge of up to 8% in pre-market trading. However, they later settled with a 3% increase by late morning in New York. In May of this year, Apple also secured a multibillion-dollar, multiyear deal with Broadcom for other 5G components.