In a significant development for the tech industry, Qualcomm Inc. (NASDAQ:QCOM) has inked a deal to supply tech giant Apple (NASDAQ:AAPL) with modem chips for its iPhones for at least the next three years. This arrangement not only smooths out a financial bump in Qualcomm’s road but also points towards a slower than anticipated progression in Apple’s endeavors to produce its own chips.
Qualcomm’s shares (QCOM) reflected the positive impact of this news, surging about 8% in early trading on Monday.
Under the new agreement, announced on Monday, the San Diego, California-based firm will equip Apple’s iPhones with its cutting-edge SnapDragon 5G modem-RF systems throughout 2024, 2025, and 2026.
This news comes as somewhat of a surprise considering Apple’s ongoing efforts to create its own systems since acquiring Intel’s (NASDAQ:INTC) smartphone-modem business in 2019. However, it seems that Apple’s timeline for rolling out its own connectivity chip sets keeps getting pushed back, leading to this extended alliance with Qualcomm.
In essence, this unfolding scenario indicates that while Apple continues to strive for self-reliance in terms of chip production, Qualcomm remains a reliable ally, ensuring that Cupertino’s customers continue to enjoy top-notch connectivity in the interim.
Qualcomm also announced Monday that it anticipates supplying only 20% of the modem chips for Apple’s iPhone models in 2026. This projection hints at Apple’s potential timeline for integrating its own modems.
Notably, this is reminiscent of a similar three-year agreement signed between the two tech firms back in 2021, where Qualcomm also forecasted a 20% share in the final year. Since the end of last year, however, Qualcomm has been the primary provider of modems for the 2023 iPhone models.
With these developments, it seems that while Apple is steadily working towards self-sufficiency in modem production, Qualcomm continues to be a key player in the interim, ensuring that the connectivity needs of Apple’s iPhones are met with top-tier technology.
As already mentioned, the renewal of this partnership may be indicative of a delay in Apple’s development of its own 5G modem, suggesting the iPhone maker isn’t ready to produce them independently just yet.
Despite this, Apple continues to make strides in technology and innovation. The tech giant is set to introduce its latest lineup of iPhones at a much-awaited event scheduled for Tuesday. This launch, eagerly anticipated by tech enthusiasts worldwide, will showcase Apple’s newest devices, reflecting the company’s ongoing commitment to pioneering technological trends and transforming user experiences.
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