According to CNBC, Qualcomm said on Monday that it will supply 5G modems (baseband chips) for smartphones to Apple until 2026, which is a three-year extension of the contract.
Wall Street analysts and Qualcomm executives have previously said they expect Apple to use an in-house developed 5G modem starting in 2024. At present, it seems that Apple’s self-developed products need to be postponed.
Qualcomm currently supplies 5G modems for Apple’s iPhones, but Apple has been working to build its own modems to move away from reliance on Qualcomm chips. Apple had acquired Intel’s smartphone modem unit and began building its own modems in 2019. However, analysts said Apple would face challenges in ditching Qualcomm chips due to their complexity.
Qualcomm said that under the six-year agreement, Qualcomm will continue to collect patent fees from Apple. The agreement comes at the end of a legal dispute between Apple and Qualcomm over royalties, which was settled in 2019.
It is found that Qualcomm jumped more than 8% before the market opened as soon as the news came out. The confirmation of this news means that the upcoming iPhone 15, iPhone 16, iPhone 17 and even iPhone 18 series new models (if the naming rules remain unchanged) will still use Qualcomm 5G modems.
However, Apple apparently plans to gradually transition to its own 5G modems, and Qualcomm is expected to still have a 20% modem share of iPhone shipments by 2026.