Qualcomm Inks Deal With Apple to Supply iPhone Chips Through 2026
Qualcomm reached a three-year deal with Apple to supply the iPhone maker with 5G communications chips, the latest sign that Apple’s effort to make them in-house has yet to bear fruit. Qualcomm said Monday it would supply Apple with the modem chips for smartphone launches in 2024, 2025 and 2026, in a deal with terms similar to a previous arrangement between the companies. Past supply deals have been lucrative for Qualcomm and expensive for Apple.
Sales of modems to Apple were about $7.26 billion in Qualcomm’s last fiscal year, or about 16% of its overall revenue, according to a UBS estimate from last month. Qualcomm, whose shares have fallen by 20% in the past year amid dropping demand for smartphones, didn’t say how much its newest deal with Apple was worth. For Apple, though, the deal might indicate that a long-running effort to develop its own modems isn’t making its way into the company’s flagship phones any time soon.
Apple bought Intel’s smartphone-modem business in 2019 for $1 billion, bringing on some 2,200 staff members and a portfolio of patents. Intel also had struggled to develop 5G modems, and had been losing around $1 billion a year on the operation. Apple has a long record of developing its own technology and reducing its reliance on outside chip vendors.
In 2010, it launched its first processing chip for its iPad and iPhone products. Over the years, these internally built mobile chips have helped Apple gain an edge over its Android phone rivals in performance and battery life. Android phones mostly rely on the same third-party chip vendors such as Qualcomm and Taiwan-based MediaTek.
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