Qualcomm and Apple have shocked the tech industry by extending their partnership and signing a deal worth billions of dollars. The agreement states that Qualcomm will supply Apple with 5G chips until at least 2026, far surpassing the expectations of many analysts.
This announcement came as a surprise to many, as there had been speculation that Apple was working towards developing its own modem chips. However, by renewing their supply agreement with Qualcomm, it seems that Apple is not rushing into this independent venture.
The market response to the news was positive, with Qualcomm’s shares rising by 4% and Apple’s shares rising by 0.5% following the announcement. This demonstrates the confidence investors have in the long-term prospects of this partnership.
The original supply agreement between Qualcomm and Apple was set to expire this year. However, under the new accord, Qualcomm will continue to supply chips for Apple’s phones each year until 2026. The exact value of the deal has not been disclosed, but it is expected to be a significant sum considering the duration and scale of the partnership.
In addition to the chip supply agreement, the patent licensing deal between Qualcomm and Apple, which was signed in 2019, will remain in place until 2025. There is also an option to extend this agreement for an additional two years.
Apple’s decision to continue working with Qualcomm is seen as a strategic move to reinforce its supply chains amid challenges in China and its ongoing transition to using its own processing chips. While Apple is working on developing its own modem technology, no timeline has been provided for its implementation.
Qualcomm predicts that only a fifth of Apple’s iPhones will utilize its chips by 2026. However, given Apple’s history of increasing its usage of Qualcomm modems in the past, this projection may prove to be conservative.
The collaboration between Qualcomm and Apple is significant not only for the two companies involved but also for the wider industry. Qualcomm’s financial projections will now incorporate the partnership with Apple and its chip supply, highlighting the importance of this collaboration in shaping the future of mobile technology.
