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Qualcomm and Apple extend 5G chip deal until 2026

Qualcomm on Monday announced an extension of its deal with Apple to provide 5G chips until at least 2026. The move comes as Apple navigates greater complications in China and aims to strengthen its supply chains elsewhere .

This expanded collaboration, which could be worth billions to Qualcomm, now extends three years beyond previous expectations. The development suggests that Apple won’t release its modem immediately, even after it transitions its computers to self-designed processing chips. Qualcomm shares saw a 4% rise in early trade, while Apple shares saw 0.5% growth. Qualcomm is a leader in the design of modem chips that facilitate mobile data network connectivity.

The previous chip supply deal between San Diego-based Qualcomm and Apple, established after a long-running legal dispute in 2019, ends this year. This means that the early presentation of iPhones on Tuesday would mark the last batch of the previous deal. With the latest deal, Qualcomm is committed to meeting Apple’s chip requirements for phones to be released annually through 2026. Financial details remain undisclosed, but Qualcomm cites the terms of the deal as “ similar” to the previous agreement.

Research by UBS analysts on Aug. 3 speculated that Apple’s chip purchase from Qualcomm amounted to about $7.26 billion in 2022. In addition, Qualcomm’s 2019 patent licensing agreement with Apple remains valid, with its expiration in 2025 and a two-year extension option.

Susannah Streeter, head of markets and money at Hargreaves Lansdown, highlighted Apple’s strategic shift to ensure supply chain reliability, potentially delaying its independent chip production aspirations.

While Apple’s efforts in modem technology are evident, with its $1 billion acquisition of Intel’s modem unit in 2019, they have not disclosed their pace of chipset integration. Qualcomm predicts that by 2026 only 20% of Apple’s iPhones will use its chips. However, Qualcomm’s past projections have often underestimated its Apple business, as seen with all iPhone 14 models last year that incorporated Qualcomm modems.

This article is sourced from and written by AI.

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