Qualcomm to supply Apple with 5G chips until 2026 under new deal

Qualcomm (QCOM.O) on Monday said it had signed a new deal with Apple (AAPL.O) to supply 5G chips to the iPhone maker until at least 2026.

Qualcomm, whose shares rose 5% in early trading, is the leading designer of what are known as modem chips that connect phones to mobile data networks.

The San Diego, California-based firm previously signed a supply deal with Apple in 2019, after the two companies settled a protracted legal battle.

That chip supply agreement ends this year, meaning that the iPhones that Apple is expected to announce Tuesday would be the last phone debut under that agreement.

Under the deal announced Monday, Qualcomm said it will supply Apple with chips for phones that will come out each year until 2026. Qualcomm did not disclose the value of the deal, saying only that the terms are “similar” to its previous agreement.

Qualcomm also said that a patent licensing deal it signed with Apple in 2019 remains in place. That deal expires in 2025, but the companies have an option to extend it for two years.

“At a time when Apple is running into increasing challenges in China, reinforcing its supply chains elsewhere is a priority, and it appears the company is rolling back or at least delaying plans to go at it alone in more areas with its own chip production,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Apple is working on its own modem technology and spent $1 billion to buy Intel’s (INTC.O) modem unit in 2019. Apple has not said how quickly it plans to ramp up the use of its own chips.

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