Qualcomm will supply modem chipsets for iPhones for at least three more years, removing a financial pothole in Qualcomm's path.
Qualcomm Inc. will supply modem chips for Apple Inc.’s iPhones for at least three more years, removing a financial pothole in Qualcomm’s path and suggesting Apple’s attempt to make its own chips is moving slower than expected.Qualcomm announced Monday morning that under a new deal with Apple AAPL, +0.66% it will supply iPhones with SnapDragon 5G modem-RF systems in 2024, 2025 and 2026. Apple has been developing its own systems since purchasing Intel Corp.’s INTC, +1.
Qualcomm announced that the terms of the new deal are “similar” to the previous three-year agreement. Apple was asked to confirm and for comment when the news was released Monday morning. The company is expected to show off its new lineup of iPhones at an event on Tuesday. It “clearly demonstrates both AAPL’s problems with developing the technology and Qualcomm’s technological leadership in the space,” Rasgon said in a note to clients. “And the longer it takes, the harder it is likely to be as cellular technologies do not stand still.”
Analysts took that to mean Qualcomm still stood to lose a huge chunk of revenue beginning next year. Oppenheimer analysts wrote in August that Qualcomm management “reaffirmed expected loss of modem socket beginning w/iPhone 16 launch next year,” and predicted an ultimate revenue revenue loss of $10 billion for Qualcomm.
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