- Qualcomm on Monday said it will supply Apple with 5G modems for smartphones by 2026.
- Wall Street analysts and Qualcomm officials have said they expect Apple to use a domestically developed 5G modem as early as 2024.
Photo taken on Aug. 14, 2023 shows iPhones at an Apple store in Hangzhou, east China’s Zhejiang province. On the same day, data released by TechInsights showed that Apple’s iPhone sales in China surpassed the US for the first time in the second quarter of 2023, becoming the largest single market for iPhone exports.
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Qualcomm on Monday said it will supply Apple with 5G modems for smartphones by 2026.
Wall Street analysts and Qualcomm officials have said they expect Apple to use a domestically developed 5G modem as early as 2024.
Apple’s continued sales will boost Qualcomm’s handset business, which posted $5.26 billion in sales in the quarter ended in June, and could soften the blow of losing an important customer. According to UBS estimates, about 21% of Qualcomm’s fiscal 2022 revenue of $44.2 billion will come from Apple.
Qualcomm currently supplies Apple with 5G modems for its iPhones, but Apple is working to develop its own modems to move away from Qualcomm chips. It is Purchased Intel’s smartphone modem division is set to launch its own modem in 2019. However, analysts have suggested that it will be challenging for Apple to pull away due to the complexity of Qualcomm’s chips.
According to UBS estimates, Qualcomm makes money from Apple through cellular licensing fees of about $1.9 billion by 2022.
Qualcomm continues to collect royalties from Apple under the six-year deal. The deal comes at the end of a legal battle between Apple and Qualcomm over royalties that was settled in 2019.
Qualcomm says it expects to supply only 20% of the modems needed for Apple’s 2026 smartphone launch, indicating that it can still expect Apple’s business to eventually decline. A Qualcomm official said the company did not update its guidance to take Apple sales into account.
Apple is expected to announce new iPhones on Tuesday, called the iPhone 15, which will use Qualcomm modems.
CNBC has reached out to Apple for comment and will update this story accordingly.