Apple who are tipping billions into developing their own components, appear to have hit another bottleneck with the iPhone maker, striking another 5G deal with Qualcomm, a Company they were forced to pay over $50 million to after a US court ruled that they stole Qualcomm patents in the past.
Overnight it was revealed that Apple has been forced to extend an agreement to get modem semiconductors from Qualcomm for three more years, in what Bloomberg is claiming is a sign that its ambitious effort to design the chips in-house is taking longer than expected.
Qualcomm sued Apple in 2019, accusing it of violating patents related to improving mobile phones’ poor battery life.
Qualcomm shares surged on the news.
Apple’s agreement with Qualcomm covering older iPhones had been set to end this year, and the latest iPhone — due tonight — was expected to be one of the last to rely on the Qualcomm modem chip.
Qualcomm shares were up 4% in early afternoon trade.
Apple shares rose 0.5%.
Qualcomm will supply 5G chips until at least 2026, at a time when the iPhone maker faces increased challenges in China and looks to reinforce its supply chains elsewhere.
The iPhone maker is Qualcomm’s largest customer — accounting for nearly a quarter of revenue, according to data compiled by Bloomberg.
And their relationship helps validate Qualcomm’s claim to having the best smartphone modem, a critical component that allows devices to connect to the internet and make calls. Starting with the iPhone 12 generation, the chip has supported speedier 5G networks.
“This agreement reinforces Qualcomm’s track record of sustained leadership across 5G technologies and products,” the San Diego-based chipmaker said.
Back in 2020, Apple was bragging that it was developing its own modem as a “key strategy transition.”
Johny Srouji, its chip chief, said at the time that the work was full speed ahead, now it appears that Apple is struggling with existing patents owned by other Companies such as Qualcomm hindering development.
Some analysts expected the component to be ready for the 2023 iPhone, but Qualcomm quashed that speculation last year.
Apple was still looking to ship the modem at the end of 2024 then 2025 now it appears that Apple is uncertain of when their hardware will be ready.
Bloomberg claims that Apple who waged legal challenges against Qualcomm’s business model that charged licensing fees for patents that govern the fundamentals of how a wireless phone networks operate.
Apple eventually lost that fight and agreed, like other major phone makers, to license Qualcomm’s technology.
