Apple extends Qualcomm contract to 2026 as homebrew 5G chip dream still on snooze
Chipmaker reigns supreme, at least until iGiant gets its house in order
Apple looks to have further delayed the introduction of its own 5G modem chips after it extended an agreement with Qualcomm to use its components until at least 2026.
The US-based smartphone chipmaker said it has entered into an agreement to supply Snapdragon 5G Modem‑RF Systems for Apple smartphone launches in 2024, 2025, and 2026, meaning the iPhone maker will continue to use its cellular silicon for at least the next three years.
But the luxury hardware company has longstanding plans to eventually use its own radio chip designs in its handsets. As The Register reported earlier this year, it was said to be preparing internally produced modem chips for introduction in 2024, which would replace those it buys in from Qualcomm.
Looking back even further, it was reported in 2021 that the Cupertino-based corporation was aiming to have homebrewed 5G silicon in the iPhone models released this year, which would presumably have been the iPhone 15 family that is widely expected to be announced at an Apple event in the US later today (September 12).
That no longer appears to be the case, and experts are divided over the reasons, with many claiming Apple is simply finding it harder to come up with its own cellular modem silicon than it had anticipated, while other reports point to Cupertino struggling with supply chain issues.
"Given the historical relationship between Apple and Qualcomm and the usual strategy from Apple about avoiding single vendor lock-in, it is clear that Apple's priority is to develop their own chipsets and stop this agreement with Qualcomm," IDC Associate Vice President Alejandro Cadenas told us.
However, Apple's efforts to develop its own 5G chipsets are clearly not progressing as expected, and it needs to extend the agreement to get to a point when it will be able to swap to its own hardware, Cadenas said.
"Unofficial expectations are that it will not take till 2026, but that will give Apple enough time to make sure their own alternative is high enough quality," he added.
In a tweet on the site formerly known as Twitter, PP Foresight telecoms analyst Paolo Pescatore called the announcement "significant" and said it provides short to mid-term certainty for both companies.
Also on social media, CCS Insight Chief Analyst Ben Wood said the move "underlines challenges Apple faces to develop its own 5G solutions," but added: "Make no mistake Apple is not giving up. It continues to throw huge resources at this challenge."
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A report in the South China Morning Post hinted that the iPhone maker is more focused on strengthening its supply chains, saying the company faces "increased challenges" in China and is seeking to increase its supply of components from elsewhere.
Whatever the precise reason, all agree this is a win for Qualcomm, at least in the short term.
"Qualcomm has probably leveraged their market position and Apple's lack of alternatives to reach a commercial agreement like this. Big win for Qualcomm," commented Cadenas.
However, the terms of the contract were not made public. According to a brief presentation on its investor site, Qualcomm said they are similar to the deal it struck with Apple in 2019, when the company abruptly withdrew legal claims it had filed against the smartphone chipmaker.
That legal action involved claims that Qualcomm was abusing its market dominance to charge too much in royalties for cellular technology, and saw Apple briefly switch to using modem silicon from Intel in protest.
The two companies settled all their licensing disagreements out of court and signed a new deal for Apple to use Qualcomm chips in iPhones. The loss of Apple as a customer pulled the rug from under Intel's 5G modem efforts, and led to Apple assimilating the majority of Intel's smartphone modem business shortly afterwards in a transaction valued at $1 billion.
Ironically, that move gave Apple the resources it needed to develop its own modem chip designs, although it appears to be taking longer than the outfit expected. We asked Apple for comment, and will update if we hear back. ®