Qualcomm announced in a statement on Monday that it will supply Apple with 5G modem devices for smartphones until 2026.
Previously, Wall Street analysts and Qualcomm officials had expected Apple to use in-house developed 5G modem technology starting in 2024.
Continued sales to Apple will boost the business of the American chip giant, Qualcomm, which recorded sales of $5.26 billion in the quarter ending in June last year and may ease the potential loss of a significant customer.
About 21% of Qualcomm’s financial revenue in 2022, estimated at $44.2 billion by UBS, came from Apple.
Currently, Qualcomm supplies its American counterpart with 5G modem chips for its iPhones, however, Apple has been working on building its own modem devices to reduce reliance on Qualcomm’s chips.
Apple had acquired the smartphone modem division from Intel in 2019 to develop its modem technology. Analysts, however, suggest that it may still be challenging for Apple to completely distance itself from Qualcomm due to the complexity involved.
Qualcomm also generates revenue from cellular licensing fees, which amounted to approximately $1.9 billion in 2022, as estimated by UBS.
It’s worth noting that Qualcomm continues to collect royalties from Apple under a six-year agreement, reached at the end of a legal battle between Apple and Qualcomm over intellectual property rights, which was settled in 2019.
Qualcomm expects to provide only 20% of the required modem devices for the iPhone’s launch in 2026, indicating that it likely anticipates Apple’s business to eventually decline.
A Qualcomm official mentioned that the company has not updated its guidance to account for Apple’s sales.
Tomorrow, the American tech giant is expected to unveil the iPhone 15, which uses Qualcomm’s modem devices.
