Qualcomm said on Monday it would continue to supply 5G modems for Apple smartphones. Wall Street analysts and Qualcomm officials have previously said they expect Apple to use a self-developed 5G modem starting in 2024. Clearly, continued sales to Apple will boost Qualcomm's mobile phone business, which had sales of $5.26 billion in the quarter ended in June, and could soften the blow of potentially losing an important customer.
According to UBS estimates, about 21% of Qualcomm’s $44.2 billion revenue in fiscal 2022 will come from Apple.
Qualcomm currently supplies 5G modems for Apple's iPhones, but Apple has been working to make its own modems away from Qualcomm chips. The company has set up its own smartphone modem division to build its own modems. However, analysts believe that due to the technical advantages of Qualcomm chips, Apple will face challenges in getting rid of Qualcomm chips.
Qualcomm, on the other hand, can also make money from Apple through mobile phone licensing fees, which UBS estimates will be about $1.9 billion in 2022.
Qualcomm will continue to collect patent royalties from Apple under a six-year agreement, the company said. The agreement comes at the end of Apple's legal battle with Qualcomm over patent royalties, which the two parties settled in 2019.
Qualcomm said it expects to supply only 20% of the modems needed for Apple's 2026 smartphones, suggesting it may still expect Apple's business to eventually decline. A Qualcomm official said the company would not update its guidance to take Apple's sales into account.
Apple is expected to release a new iPhone on Tuesday, which may be called the iPhone 15 series. Not surprisingly, it will continue to use Qualcomm modems.
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