Apple renews Qualcomm deal in sign its own modem chip isn’t ready

tech.hindustantimes.com:

Apple Inc. is extending an agreement to get modem semiconductors from Qualcomm Inc. for three more years, a sign that its ambitious effort to design the chips in-house is taking longer than expected. Qualcomm shares surged on the news.

The new pact will cover “smartphone launches in 2024, 2025 and 2026,” Qualcomm said in a statement Monday. The companies' agreement had been set to end this year, and the latest iPhone — due on Tuesday — was expected to be one of the last to rely on the Qualcomm modem chip.

Instead, Qualcomm will maintain its lucrative position within Apple's supply chain. 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. Though the financial terms of the new deal weren't disclosed, Qualcomm said it was similar to the previous arrangement signed in 2019.

Qualcomm shares rose 4.3% at 9:30 a.m. in New York on Monday. Apple was up 1.2%.

For Apple, the move suggests that building a modem component has been more challenging than expected. The effort has been years in the works. The Cupertino, California-based company kicked off the project in 2018 and then bolstered it with the acquisition of Intel Corp.'s smartphone chip business in 2019.

By 2020, Apple heralded the development of its own modem as a “key strategy transition.”