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Qualcomm Extends 5G Modem Supply to Apple Until 2026 Despite Earlier Predictions

On Monday, Qualcomm announced it will provide Apple with 5G modems for their smartphones until 2026. This comes despite earlier predictions by Wall Street experts and Qualcomm representatives who anticipated Apple transitioning to its own 5G modems by 2024.

Qualcomm's continued collaboration with Apple is set to enhance its handset business, which recorded sales of $5.26 billion in the quarter ending in June. Given that roughly 21% of Qualcomm’s $44.2 billion revenue in 2022 was attributed to Apple, as per UBS analysis, this prolonged partnership can alleviate the risk of Qualcomm losing a significant client.

Even though Apple is a regular customer for Qualcomm’s 5G modems for iPhones, Apple had made strides to develop its modems by acquiring Intel’s smartphone modem sector in 2019. But, transitioning away from Qualcomm’s intricate chips might be a tall order for Apple, as industry observers have noted.

Beyond supplying modems, Qualcomm earned around $1.9 billion in cellular licensing fees from Apple in 2022, as highlighted by the UBS analysis. The two giants are under a six-year royalty agreement, which was the result of a 2019 legal settlement over royalty disputes.

Although Qualcomm is set to supply modems for Apple's smartphones until 2026, the company anticipates providing only 20% of the modems for Apple’s smartphone release that year. This suggests that Qualcomm envisions a gradual reduction in their business ties with Apple. An official from Qualcomm clarified that their projections have not been revised based on the renewed Apple deal.

As Apple gears up to unveil its likely-to-be-named iPhone 15 on Tuesday, Qualcomm's modems are confirmed components. Apple, however, chose not to provide a comment on the matter.


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