Tue. Sep 26th, 2023
Qualcomm Signs New 5G Chip Deal with Apple Until 2026

Qualcomm has announced a new agreement with Apple to supply 5G chips for the iPhone maker until at least 2026. As the leading designer of modem chips that connect phones to mobile data networks, Qualcomm’s previous chip supply deal with Apple was signed in 2019 after resolving a legal dispute. The current agreement, which expires this year, means that the upcoming iPhone models expected to be announced this week will be the last to debut under the old agreement.

Under the new deal, Qualcomm will provide chips for Apple’s phones each year until 2026, but the specific value of the agreement has not been disclosed. Qualcomm has stated that the terms of the new deal are “similar” to the previous one. Additionally, the patent licensing agreement between Qualcomm and Apple, also signed in 2019, will remain intact until 2025. The companies have the option to extend it for an additional two years.

The decision to continue the partnership with Qualcomm reinforces Apple’s supply chains, particularly as it faces challenges in the Chinese market. Susannah Streeter, head of money and markets at Hargreaves Lansdown, noted that by securing chip supply from Qualcomm, Apple is potentially delaying or revising its plans for independent chip production.

While Apple is working on developing its own modem technology and acquired Intel’s modem unit for $1 billion in 2019, the timeframe for integrating its own chips into iPhones is currently unknown.

Qualcomm expects that only a fifth of Apple’s iPhones will use its chips by 2026, according to its financial projections. However, it’s worth noting that their previous projection for their business with Apple in 2021 was overly conservative, as all iPhone 14 models released last year featured Qualcomm modems.