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“Apple Extends 5G Chip Partnership with Qualcomm Through 2026 in New Agreement”

“Apple Extends 5G Chip Partnership with Qualcomm Through 2026 in New Agreement”

In a strategic move aimed at solidifying their collaboration, Qualcomm and Apple have announced an extended partnership that will see Qualcomm supply Apple with 5G chips until at least 2026. This announcement comes at a pivotal time for Apple, as the tech giant faces growing challenges in the Chinese market while seeking to bolster its supply chain operations globally.

The significance of this extended agreement lies not only in its duration but also in its implications for Apple’s in-house chip development. Despite Apple’s ambitious endeavors to design its own processing chips for its devices, the decision to continue relying on Qualcomm for 5G chips suggests that Apple is not in a rush to introduce its own modem technology.

Qualcomm, a San Diego, California-based semiconductor company renowned for its expertise in modem chip design, has been in a longstanding partnership with Apple. This collaboration initially began after the resolution of a protracted legal battle between the two companies in 2019.

The original chip supply agreement was set to conclude this year, making the upcoming iPhone launch the last one under that particular deal. However, the new agreement, unveiled on Monday, outlines that Qualcomm will remain the primary supplier of 5G chips for Apple’s iPhones, ensuring a continuous supply chain until 2026. While the exact financial terms of the deal have not been disclosed, Qualcomm has indicated that they are “similar” to the previous agreement.

Apple, as of now, has not released an official statement regarding this development.

Analysts at UBS estimated that Qualcomm’s chip sales to Apple amounted to a substantial $7.26 billion in 2022, highlighting the magnitude of this ongoing collaboration.

Additionally, the two tech giants have reaffirmed the existence of a patent licensing deal signed in 2019, set to expire in 2025 but with an option for a two-year extension.

This strategic move by Apple and Qualcomm is viewed as a response to the mounting challenges faced by Apple in the Chinese market. As the company navigates these difficulties, securing and fortifying supply chains outside China has become a top priority. Furthermore, this partnership extension suggests that Apple may be slowing down or deferring its plans for extensive in-house chip production, opting to leverage Qualcomm’s expertise in modem technology.

Qualcomm has projected that by 2026, only one-fifth of Apple’s iPhones will feature their chips. However, it’s worth noting that a similar projection made by Qualcomm in 2021 turned out to be overly conservative, with all iPhone 14 models released in the previous year incorporating Qualcomm modems. In fact, Qualcomm’s Chief Financial Officer, Akash Palkhiwala, revised his predictions for the 2023 iPhone lineup, stating that he expected the “vast majority” of them to include Qualcomm modems.

This collaboration extension between Apple and Qualcomm signifies not only a continuation of a fruitful partnership but also the recognition of Qualcomm’s pivotal role in Apple’s product ecosystem, particularly in the realm of 5G connectivity. It will be interesting to observe how this partnership evolves in the ever-evolving landscape of smartphone technology.


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