The chipmaker Qualcomm said on Monday, September 11, that it would continue providing Apple with 5G modems for iPhones and iPads until 2026.
According to CNBC, Wall Street analysts and Qualcomm executives have previously said that they anticipated Apple will begin using an internally built 5G modem beginning in 2024.
Ties Between Apple and Qualcomm
The sustained sales to Apple will increase Qualcomm's phones division, which recorded $5.26 billion in revenues in the quarter that ended in June. This will help Qualcomm lessen the pain of possibly losing a key client since the continuous sales to Apple would enhance Qualcomm's overall revenue.
According to an estimate provided by UBS, Apple contributed around 21% of Qualcomm's total revenue of $44.2 billion in fiscal 2022.
At the moment, Qualcomm is the exclusive provider of 5G modems for Apple's iPhones. However, Apple has been busy developing its very own modems in an effort to wean itself off of dependence on Qualcomm equipment.
In 2019, it made the decision to construct its own modem, so it bought the smartphone modem division of Intel. Nevertheless, a number of industry observers believe that due to the intricacy of Qualcomm's processors, it will be difficult for Apple to transition away from using Qualcomm's products.
The cellular license costs that Apple paid to Qualcomm in 2022 were around $1.9 billion, as per the estimation provided by UBS. Qualcomm also generates money from Apple via other means.
According to Qualcomm, a six-year deal between the two companies allows it to continue collecting royalties from Apple. This deal was reached after the conclusion of a legal dispute between Apple and Qualcomm about royalties, which was resolved in 2019.
Qualcomm has said that it anticipates supplying just 20% of the modems required for Apple to debut its next smartphone in 2026, which is an indication that the company likely still anticipates the Apple business to ultimately shrink. An executive from Qualcomm said that the business would not be revising its forecast to take into consideration the sales made by Apple.
Within this week, Apple is set to make an announcement on new iPhones, which will most likely be referred to as the iPhone 15. The new units reportedly feature modems manufactured by Qualcomm.
See Also: China Bans iPhones in Government Offices as Conflicts With US Increase
iPhone Ban in China
After the announcement of the iPhone ban on Chinese government employees, Apple's market value dropped by over $200 billion, as reported by Fox Business last week. The tech giant's stock has fallen roughly 1% over the past month.
Last week, it was revealed that employees at China's key government agencies had gotten orders from higher-ups in recent weeks in the form of chat group messages or face-to-face meetings.
As part of a larger effort to limit the export of sensitive Chinese data, the change was also marketed as a means to improve cybersecurity.
Reportedly, China has restricted iPhone usage at government workplaces for years. However, the latest regulation expands the restriction and indicates a stronger attempt to enforce the rules from Beijing.
See Also: China's New iPhone Restrictions Drive Apple Shares to Drop, Hurting Tech Industry
