Qualcomm has signed a deal with Apple to supply 5G chips until at least 2026, at a time when the iPhone maker faces increased challenges in China and looks to reinforce its supply chains elsewhere.
The deal extends a relationship worth billions of dollars to Qualcomm for at least three years beyond what was expected and indicates Apple is not rushing out its own modem, despite moving all its computers to processing chips of its own design.
Qualcomm is the leading designer of modem chips that connect phones to mobile data networks. The company previously signed a chip supply deal with Apple in 2019, after the two companies settled a protracted legal battle.
The supply agreement ends this year, meaning that the iPhones that Apple is expected to announce on Tuesday would be the last phone debut under that deal.
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Under the new accord, Qualcomm said it will supply Apple with chips for phones that will come out each year until 2026.
Qualcomm did not disclose the value of the deal, saying only that the terms are “similar” to its previous agreement. UBS analysts estimated that Qualcomm sold $7.26 billion of chips to Apple in 2022.
Qualcomm also said a patent licensing deal it signed with Apple in 2019 remains in place. That deal expires in 2025, but the companies have an option to extend it for two years.
Apple is working on its own modem technology and spent $1 billion to buy Intel’s modem unit in 2019. Apple has not said how quickly it plans to ramp up the use of its own chips. Qualcomm said its financial projections will assume that only a fifth of Apple’s iPhones will use its chips by 2026.
