Qualcomm has announced a new deal with Apple to supply 5G chips for iPhones until at least 2026. The San Diego-based company is a leading designer of modem chips that connect phones to mobile data networks. This agreement comes after the two companies settled a long legal battle in 2019 and signed a chip supply deal. As the previous supply agreement is set to end this year, the upcoming iPhones that Apple is expected to announce will be the last under that agreement.
Under the new deal, Qualcomm will provide Apple with chips for its phones that are released each year until 2026. The terms of the deal have not been disclosed, but Qualcomm stated that they are “similar” to the previous agreement. This announcement also confirms that the patent licensing deal signed between the two companies in 2019 remains in place. The current deal expires in 2025, but there is an option to extend it for an additional two years.
Apple has been working on developing its own modem technology and made a significant investment in 2019 by acquiring Intel’s modem unit for $1 billion. However, the timeline for Apple to fully transition to its own chips has not been revealed.
Qualcomm’s financial projections assume that only one-fifth of Apple’s iPhones will use its chips by 2026. However, this projection may turn out to be conservative, as the previous projection for 2021 underestimated the number of iPhones that used Qualcomm modems.
With this new deal, Qualcomm secures its position as a key supplier of 5G chips for Apple’s iPhones over the next several years.