Qualcomm signs deal to supply iPhone modems until 2026

Qualcomm will be supplying Apple with 5G modems for the iPhone up until 2026, a deal that delays the arrival of an Apple-created modem in the smartphone for a few more years.

The 2023 iPhone 15 was expected to be the last model sporting a Qualcomm 5G chip, but that is no longer the case. In an announcement on Monday, Qualcomm said it has entered an agreement with Apple to continue supplying modems for three more years.

The press release states that Qualcomm's Snapdragon 5G Modem-RF Systems for smartphones will be provided to Apple for smartphone launches in 2024, 2025, and 2026. This would in theory mean Qualcomm's modems will be used in the iPhone 18 range.

It is a massive turnaround for Qualcomm, which in May offered expectations with assumptions that Apple will start to use its own modem products in the future. Qualcomm CEO and President Cristiano Amon said in February that he expected Apple to be using its own modem in 2024, but also that "if they need ours they know where to find us."

Apple has been developing its own 5G chipsets since 2019, after purchasing Intel's smartphone modem business, but little has surfaced since from that deal.

Despite the supply deal being a positive to Qualcomm, it doesn't expect that only its modems will be used by Apple in the future. Qualcomm's long-term financial planning assumption statement proposes that Qualcomm could have just a 20 percent share of modems used in Apple's smartphone launches in 2026.

Additional notes accompanying the announcement explain that the global patent license agreement that was effective April 2019 "remains unchanged" following the deal.

The direct license between Apple and Qualcommm which CNBC reports UBS as estimating Apple paid $1.9 billion in 2022, was for a six-year term, and includes a two-year option to extend it further.

It is reckoned that about 21% of Qualcomm's 2022 revenue of $44.2 billion stemmed from Apple. With an extension of the modem deal, it means Qualcomm is retaining billions in revenue that would otherwise dry up if Apple moved over to its own modem designs.

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21 Comments

avon b7 8045 comments · 20 Years

About 1 year ago

Money for nothing and your chicks for free.

Seeing as Qualcomm never expected any Apple business in the first place I imagine they are laughing all the way to the bank.

Another year of extra business from what rumours were pointing to (at least) before things normalise.

red oak 1104 comments · 13 Years

20% share of Apple’s modems in 2026 means Qualcomm would only be supplying for older phones. Work backwards from that, and it means Apple is rolling out its modem in a big way starting in Fall of 2024. That would be for the launch of the iPhone 16 family. With a “full” rollout in the Fall of 2025.

Really not seeing the “Big News” about a “delay”

tmay 6456 comments · 11 Years

avon b7 said:

Money for nothing and your chicks for free.

Seeing as Qualcomm never expected any Apple business in the first place I imagine they are laughing all the way to the bank.

Another year of extra business from what rumours were pointing to (at least) before things normalise.

Apple's the one laughing, since they are still making great margins even with a Qualcomm modem, while paying Qualcomm something on the order of $9B.

How much revenue did Apple generate in 2022?

That would be $394 Billion, 52% from iPhone sales, and an overall net profit of almost $100B.

Meanwhile, Apple has locked up almost all of the early TSMC 3nm production, so everyone else will have to wait

tmay said:

avon b7 said:

Money for nothing and your chicks for free.

Seeing as Qualcomm never expected any Apple business in the first place I imagine they are laughing all the way to the bank.

Another year of extra business from what rumours were pointing to (at least) before things normalise.

Apple's the one laughing, since they are still making great margins even with a Qualcomm modem, while paying Qualcomm something on the order of $9B.

How much revenue did Apple generate in 2022?

That would be $394 Billion, 52% from iPhone sales, and an overall net profit of almost $100B.

Meanwhile, Apple has locked up almost all of the early TSMC 3nm production, so everyone else will have to wait

But Qualcomm is laughing more, right?

Huawei was reducing orders substantially. Apple had long gone from its client portfolio and on top of that there was a worldwide, multi billion dollar patent spat being fought.

Then suddenly, as if by magic, Huawei was ordering millions of chips (due to sanctions) and Apple dropped it fight, signed a peace deal and ordered millions more (due to Intel failing to deliver on 5G).

In the case of Apple, it had to spend a billion to absorb intel's division then continue to pay for it and invest probably more billions in R&D. Eventually it will have to pay millions to Qualcomm and Huawei in patent fees and and on the cost of manufacturing the chip itself.

And the chances of bettering either Qualcomm or Huawei on 5G (and then 5.5G and 6G) are slim at best.

In the meantime it is business as usual for Qualcomm (just less of it, as all parties eventually come to an end).

Qualcomm will just say it was good while it lasted.

avon b7 said:

tmay said:

avon b7 said:

Money for nothing and your chicks for free.

Seeing as Qualcomm never expected any Apple business in the first place I imagine they are laughing all the way to the bank.

Another year of extra business from what rumours were pointing to (at least) before things normalise.

Apple's the one laughing, since they are still making great margins even with a Qualcomm modem, while paying Qualcomm something on the order of $9B.

How much revenue did Apple generate in 2022?

That would be $394 Billion, 52% from iPhone sales, and an overall net profit of almost $100B.

Meanwhile, Apple has locked up almost all of the early TSMC 3nm production, so everyone else will have to wait

But Qualcomm is laughing more, right?

Huawei was reducing orders substantially. Apple had long gone from its client portfolio and on top of that there was a worldwide, multi billion dollar patent spat being fought.

Then suddenly, as if by magic, Huawei was ordering millions of chips (due to sanctions) and Apple dropped it fight, signed a peace deal and ordered millions more (due to Intel failing to deliver on 5G).

In the case of Apple, it had to spend a billion to absorb intel's division then continue to pay for it and invest probably more billions in R&D. Eventually it will have to pay millions to Qualcomm and Huawei in patent fees and and on the cost of manufacturing the chip itself.

And the chances of bettering either Qualcomm or Huawei on 5G (and then 5.5G and 6G) are slim at best.

In the meantime it is business as usual for Qualcomm (just less of it, as all parties eventually come to an end).

Qualcomm will just say it was good while it lasted.

LOL!.

Do you even understand capitalism?

While you're patting yourself on the back with your remarks, Apple is racing forward with its latest A series, and soon M3, both of which Qualcomm is unable to keep up with, while Huawei is at a very expensive "7nm" node, more than a couple of nodes behind Apple, and you're gloating over some level of 5G performance that consumers don't care about.

My guess is the Apple will continue to see about the same level of sales in China, and Huawei will, at best, take market share from the other Chinese OEM's, because while even Huawei fan's don't see value in a 7nm processor, they'll support China's National Champion.