Qualcomm this week issued a very brief statement with very big implications for its ongoing mobile sector revenue over the next few years. The company said it forged a new agreement with Apple to supply the iPhone maven with Qualcomm’s Snapdragon 5G Modem‑RF Systems for iPhone launches expected in 2024, 2025 and 2026.
That likely means that Apple, as some have speculated, has not been able to fully develop its own 5G modem chips for these upcoming launches. The iPhone giant had been working on those chips for years, and as a result Qualcomm had been expected to see its revenue from Apple–worth as much as $9 billion last year, or around 20% of the company’s total revenue, according to widely-published UBS estimates–to decline in the years ahead, something Qualcomm acknowledged in past statements.
Still, the door appeared to open to the possibility for at least a short-term change of plans on Apple’s part when Qualcomm stated late last year that it expected to continue to “have the vast majority of share of 5G modems for the 2023 iPhone launch.” News of the new agreement comes as Apple was expected to hold its iPhone 15 launch announcement on Tuesday of this week.
Now, it looks like Qualcomm will have a piece of the next few iPhone launches after this one, though Qualcomm decline to offer details on the terms of the new agreement or how much revenue it could bring in. A company spokesperson would say only that the terms of the latest deal “are similar to the last agreement.”
Regarding the new deal, Jack Gold, president and principal analyst of J. Gold Associates, commented in LinkedIn, stating, “This announcement reinforces that Qualcomm is ahead of the other players when it comes to the difficult task of making leading edge #modems for #5G, and eventually beyond that. It also signals that despite the rumors that Apple was trying to design its own #5G #Modem #silicon so it could own its entire chip supply chain, it apparently has given up on doing its own in favor of obtaining a known entity from a supplier with proven product.”
Apple and Qualcomm previously had a lengthy legal battle over royalties that eventually was settled in 2019, and resulted at that time in a six-year licensing agreement.