Qualcomm And Apple Sign 5G Chip Supply Deal Until 2026, To Face Challenges In China

Qualcomm Headquarters in San Diego California. (photo: dock. qualcomm)

JAKARTA - Qualcomm and Apple have signed a deal to supply 5G chips until at least 2026. This comes at a time when the iPhone maker faces rising challenges in China and seeks to strengthen its supply chain elsewhere.

Qualcomm shares rose 3.2% to $109.55 after the market opened. The company is a leading designer of what is known as a modem chip that connects phones to mobile data networks. Apple shares themselves have not changed.

San Diego, California-based company Qualcomm previously signed a chip supply deal with Apple in 2019, after the two companies settled a long legal dispute.

The supply deal expires this year, meaning that the iPhone expected to be announced by Apple on Tuesday 12 September will be the last mobile phone launch under the deal.

In an agreement announced on Monday, September 11, Qualcomm said it would supply Apple with chips for phones to be launched annually until 2026. Qualcomm did not disclose the value of the deal, saying only that the terms were "similar" to previous agreements.

Apple did not immediately respond to requests for comment.

In a research note on August 3, UBS analysts estimated that Qualcomm sold 7.26 billion US dollars (IDR 111.4 trillion) chips to Apple in 2022.

Qualcomm also said that its patent licensing agreement signed with Apple in 2019 remains in effect. The deal expires in 2025, but both companies have the option to extend it for two years.

"When Apple faces rising challenges in China, strengthening its supply chain elsewhere is a priority, and it appears the company is reducing or at least delaying its plans to manufacture its own chips in more areas," said Susannah Streeter, head of the money and market section at Hargreaves Lansdown.