Through 2026, Qualcomm announced on Monday, it will provide Apple with 5G modems for smartphones.
Wall Street analysts and Qualcomm representatives had previously stated that they anticipated Apple to begin using a custom-built 5G modem in 2024.
Continued sales to Apple will strengthen Qualcomm’s handset division, which recorded $5.26 billion in sales for the three months ending in June, and may lessen the impact of potentially losing a key client. According to a UBS estimate, Apple accounted for about 21% of Qualcomm’s $44.2 billion in fiscal 2022 revenue.
For its iPhones, Qualcomm presently provides 5G modems, but Apple has been attempting to develop its own modems to shift away from Qualcomm semiconductors. To create its own modem, it acquired Intel’s smartphone modem business in 2019. Analysts contend that the intricacy of Qualcomm’s chips makes it difficult for Apple to switch away from them.
Qualcomm receives revenue from Apple in the form of cellular licencing fees, which the UBS estimate places at $1.9 billion in 2022.
According to a six-year contract, Qualcomm is still receiving royalties from Apple, the company said. That agreement was reached after the conclusion of a legal dispute between Qualcomm and Apple regarding royalties, which was resolved in 2019.