Qualcomm Secures Deal with Apple to Supply 5G Chips Until 2026
In a move that extends their long-standing relationship, tech giant Apple has partnered with Qualcomm to supply them with 5G chips until at least 2026. This deal, worth billions of dollars to Qualcomm, solidifies their position as a key player in the smartphone market.
Despite Apple’s recent transition to developing its own processing chips for its computers, the company has opted not to rush into creating its own modem technology. This decision aligns with Apple’s cautious approach to modem development and allows them to take advantage of Qualcomm’s expertise in the field.
The announcement of this deal has had a positive impact on both companies’ stock prices. Qualcomm shares rose 4% while Apple shares increased by 0.5%, reflecting the market’s confidence in this collaboration.
The previous chip supply agreement between Qualcomm and Apple was set to expire this year. However, under the new arrangement, Qualcomm will continue to supply chips for Apple phones on an annual basis until 2026. Although the financial details of the deal were not disclosed, insiders suggest it is similar in value to the previous agreement.
Apple has refrained from commenting on the deal, but it is clear that they value their partnership with Qualcomm. The patent licensing deal between the two companies will remain intact until 2025, further solidifying their ongoing collaboration.
This deal comes at a time when Apple is focusing on reinforcing its supply chains, particularly in light of the challenges it faces in China. By securing a long-term chip supply agreement with Qualcomm, Apple can ensure stability in its production processes.
Qualcomm’s Chief Financial Officer predicts that the “vast majority” of the iPhones released in 2023 will incorporate Qualcomm modems. While the company’s financial projections suggest that only a fifth of Apple’s iPhones will use its chips by 2026, past predictions have proven to be conservative. This indicates the potential for further collaboration and market share growth between Qualcomm and Apple.
It is worth noting that Apple is actively working on its own modem technology, as evidenced by its acquisition of Intel’s modem unit in 2019. However, this new deal with Qualcomm suggests that Apple is delaying its plans to produce its own chips, opting instead for a strategic partnership with Qualcomm.
As the partnership between Apple and Qualcomm deepens, it is clear that both companies stand to benefit from each other’s expertise and market presence. This deal sets the stage for continued innovation and technological advancements in the smartphone industry.