Apple iPhones to continue using Qualcomm 5G modems till 2026

Qualcomm has announced an extension of its partnership with Apple to supply 5G chips until at least 2026. This strategic move comes at a time when Apple is navigating increased challenges in the Chinese market. This deal will help the American tech giant to fortify its supply chain operations globally.

The extended agreement was unveiled by Qualcomm on Monday. The three-year-long partnership highlights the fact that Apple is still willing to source some of the silicon from other chip suppliers. The move surpasses initial expectations by securing Qualcomm as a chip supplier to Apple for an additional three years. This is a big indication that Apple is not hastening the release of its own modem, despite transitioning its computers to in-house-designed Apple Silicon.  

Qualcomm shares surged by 4% after the announcement was made. Meanwhile, Apple's shares experienced a modest 0.5% increase. The tech giant experienced a substantial dip in market value after reports of a ban on iPhones for govt officials.  

Qualcomm, headquartered in San Diego, California, had previously entered a chip supply agreement with Apple back in 2019, following the resolution of a prolonged legal dispute between the two tech giants. This existing supply agreement is set to conclude this year, making the upcoming iPhone launch the model to use Qualcomm modems under that arrangement.

According to the arrangement, Qualcomm is slated to provide Apple with chips for their annual phone releases until 2026. While specific financial details of the deal were not disclosed, Qualcomm stated that the terms are "similar" to their previous agreement.

Apple has yet to issue an official response to this development. However, according to a report by Reuters, UBS analysts estimated in a research note dated August 3rd that Qualcomm's chip sales to Apple in 2022 amounted to an impressive $7.26 billion.

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