Apple will keep using Qualcomm 5G modems until 2026
Qualcomm will be supplying Apple with 5G modems for the iPhone up until 2026, a deal that delays the arrival of an Apple-created modem in the smartphone for a few more years.
The 2023 iPhone 15 was expected to be the last model sporting a Qualcomm 5G chip, but that is no longer the case. In an announcement on Monday, Qualcomm said it has entered an agreement with Apple to continue supplying modems for three more years.
The press release states that Qualcomm's Snapdragon 5G Modem-RF Systems for smartphones will be provided to Apple for smartphone launches in 2024, 2025, and 2026. This would in theory mean Qualcomm's modems will be used in the iPhone 18 range.
It is a massive turnaround for Qualcomm, which in May offered expectations with assumptions that Apple will start to use its own modem products in the future. Qualcomm CEO and President Cristiano Amon said in February that he expected Apple to be using its own modem in 2024, but also that "if they need ours they know where to find us."
Apple has been developing its own 5G chipsets since 2019, after purchasing Intel's smartphone modem business, but little has surfaced since from that deal.
Despite the supply deal being a positive to Qualcomm, it doesn't expect that only its modems will be used by Apple in the future. Qualcomm's long-term financial planning assumption statement proposes that Qualcomm could have just a 20 percent share of modems used in Apple's smartphone launches in 2026.
Additional notes accompanying the announcement explain that the global patent license agreement that was effective April 2019 "remains unchanged" following the deal.
The direct license between Apple and Qualcommm which CNBC reports UBS as estimating Apple paid $1.9 billion in 2022, was for a six-year term, and includes a two-year option to extend it further.
It is reckoned that about 21% of Qualcomm's 2022 revenue of $44.2 billion stemmed from Apple. With an extension of the modem deal, it means Qualcomm is retaining billions in revenue that would otherwise dry up if Apple moved over to its own modem designs.
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Comments
Seeing as Qualcomm never expected any Apple business in the first place I imagine they are laughing all the way to the bank.
Another year of extra business from what rumours were pointing to (at least) before things normalise.
Really not seeing the “Big News” about a “delay”
How much revenue did Apple generate in 2022?
That would be $394 Billion, 52% from iPhone sales, and an overall net profit of almost $100B.
Meanwhile, Apple has locked up almost all of the early TSMC 3nm production, so everyone else will have to wait
Huawei was reducing orders substantially. Apple had long gone from its client portfolio and on top of that there was a worldwide, multi billion dollar patent spat being fought.
Then suddenly, as if by magic, Huawei was ordering millions of chips (due to sanctions) and Apple dropped it fight, signed a peace deal and ordered millions more (due to Intel failing to deliver on 5G).
In the case of Apple, it had to spend a billion to absorb intel's division then continue to pay for it and invest probably more billions in R&D. Eventually it will have to pay millions to Qualcomm and Huawei in patent fees and and on the cost of manufacturing the chip itself.
And the chances of bettering either Qualcomm or Huawei on 5G (and then 5.5G and 6G) are slim at best.
In the meantime it is business as usual for Qualcomm (just less of it, as all parties eventually come to an end).
Qualcomm will just say it was good while it lasted.
Do you even understand capitalism?
While you're patting yourself on the back with your remarks, Apple is racing forward with its latest A series, and soon M3, both of which Qualcomm is unable to keep up with, while Huawei is at a very expensive "7nm" node, more than a couple of nodes behind Apple, and you're gloating over some level of 5G performance that consumers don't care about.
My guess is the Apple will continue to see about the same level of sales in China, and Huawei will, at best, take market share from the other Chinese OEM's, because while even Huawei fan's don't see value in a 7nm processor, they'll support China's National Champion.
We are not talking about performance here as a core point. We are talking about money.
We are not talking market share either.
Now, before you scurry off to yet another irrevelant point, please run through every point I made and tell me where I got it wrong.
But if you really want to talk nodes and performance, I will remind you that Huawei's new Mate 60 Pro series is besting Apple's latest phones in network speeds. That of course is a Qualcomm/Apple combo when everything is taken into account (antennas etc).
I don't need to remind you that the A16, and likely even the A15, benchmark significantly higher than Huawei's SOC, and I'm thinking that is more relevant to consumer sales than "network speeds". Oh, and then there's the A17, that will be announced tomorrow.
But let the market decide...
So, unable to deal with my comment on Apple with cameras you point out future unreleased iPhones.
On Apple’s 5G modem you do the same.
And now, unable to accept that a lowly 7nm chipset is besting Apple's current network speeds, you point to a chipset you haven't even seen (and technically hasn't been released yet) but which is entirely likely to incorporate Qualcomm's current modem anyway!
I accept that Huawei bests Apple for network speeds, but is that something that consumers care about? No.
Huawei isn't going to beat Apple in China sales, even with Huawei fans buying up the Mate 60, simply because Apple users aren't going to switch to Huawei in any significant numbers.
It was you who threw performance in here!
Meanwhile, Apple has locked up almost all of the early TSMC 3nm production, so everyone else will have to wait
And now, to add insult to injury you are throwing in... Unit sales?
Why?
Again nothing to do with the core point and as far away from it as you can drive it.
Anyway, just to give you something to think about, how long do you think companies will have to wait for TSMC 3nm when Mediatek has already presented its 3nm chips and expects them to show up in devices for the second half of 2024.
https://corp.mediatek.com/news-events/press-releases/mediatek-successfully-develops-first-chip-using-tsmcs-3nm-process-set-for-volume-production-in-2024
Look. It's simple. Go back and re-read what I said. Point by POINT, and tell me where I'm wrong.
I was asking something simple. Answer it.
Don't fire back with something irrevelant like 'but Apple will release a periscope lens tomorrow!' it won't work.
So when Apple announces the A17 at 3nm tomorrow and preorders likely open up Friday, Apple will be shipping in volume in the last quarter half of 2023, while Mediatek waits in line.
The only thing I'll point out, is that you posted in order to satiate your need to pump Huawei, and diss Apple and Qualcomm.
The point, from my very first post in this thread, was only on the financial impact.
No more. No less.
You have been throwing unrelated things in and skirting my rebuttals ever since and refused to tell me where I got things wrong. It's too late now.
You dug a hole for yourself and jumped in.
Let it go now.
If Apple were manufacturing modems themselves there would be a cost, and while Qualcomm continues to provide modem's to Apple, Apple is likely paying a small "premium" over an in house modem for that. At the same time, Apple is making high margins and generates massive revenues from the iPhone, so those "premiums" to Qualcomm don't actually have much significance on the bottom line.
That you have such a limited understanding of business is appalling. Yeah, a delay of Apple's modem has a cost, but against almost $400B in revenue and $100B in profit, it is almost a rounding error.
Keep digging!
My first post!
My first line!
It was a joke.
"money for nothing and your chicks for free" - Dire Straits
A reference to how Qualcomm ended up with a triple windfall and all without doing anything.
1. Lawsuit settled.
2. Millions in totally unexpected revenue from Apple.
3. Millions in totally unexpected revenue from Huawei.
Technically two potential competitors were also caged as a result. Could things get any better?
Well, yes actually they could. Samsung ran into Exynos problems. Unbelievable.
None of it had formed any part of its future projections. It was laughing all the way to the bank. And then some. That is my point.
Losing that revenue didn't change anything on its core roadmap because none of it was there from the the start. It was simply the icing on the cake.
Any delay to Apple doing what Huawei just did to Qualcomm (Qualcomm formerly announced a few weeks ago that there would be no further material revenue from Huawei) is simply even more Apple revenues to line Qualcomm's pockets.
And whenever Apple does finally stop ordering Qualcomm modems it will still have pay the patent fees to both Qualcomm and Huawei.
Everything else you threw in here about market share, process nodes, unit sales, who gets to wait etc was simply chaff. Irrelevant to what I said.
I have no idea what drove you to post your 'you don't understand capitalism' rant because it had nothing at all to do with my point!
From there on you simply buckled down with chaff after chaff in an effort to avoid replying to my very open, direct and simple question.
Where was what I said wrong?
Not answering that didn't leave you in the best of positions so I said you should let it go.
You chose to drag things on.
I'll bow out now because it's pointless carrying on with someone who refuses to answer the question.
Qualcomm does $44B a year revenue, so a loss of an order from Apple is 20% of its revenues, but that same order to Qualcomm is less that 2% of Apple's revenue. Apple's modem operation in an R&D expense, a fraction of the $24B that they will spend this year on R&D.
From Apple's reference, it is a rounding error.
Meanwhile, Qualcomm has its hands in many other sectors, but who knows if any of those will compensate for the loss of Apple's modem business.
I don't know what the value of Huawei's business to Qualcomm, but there's no question that Huawei's margins are much less than Apple's, so even with silicon from SMIC, Huawei isn't going to see much movement in margins.
Qualcomm is the same. Yes, Nuvia purchase to compete with Apple Silicon is officially a failure as the 4nm Snapdragon 8cx Gen 4 chips will only beat Intel's 5nm Arrow Lake to market by mere weeks - https://wccftech.com/qualcomm-oryon-problems-potential-snapdragon-8cx-gen-4-delay/ - and Microsoft won't publicly commit to use them in Surface devices anyway. But so long as Android remains vital - and despite 10 years of "all the cool kids love iPhones it will especially overseas - the best devices on that platform will have Qualcomm chips. Yes they do need another revenue stream but to get it they can ditch their agreement with Microsoft - who hasn't been upholding their end of the bargain anyway - and push ARM Linux devices, which unlike Windows on ARM actually has a market. Which was Nuvia's original goal anyway: to make chips for ARM servers.
As with Intel, for Qualcomm Apple was merely a customer. A big customer, sure, but customers come and go. And like the person who started this whole exchange said, Qualcomm has known for some time that Apple was leaving. So for them getting Apple's business until 2026 is basically free money - a bonus - that they weren't planning on getting. Who knows, maybe they can use it to buy foundry capacity from whoever has it, or to break their bad exclusivity deal with Microsoft.
I don't know all that much about Qualcomm, so I'll get my previous statement stand as is.
Apple plays the long game, nine years for the iPad, six years for the iPhone, 13 years for Apple Silicon, or 6 to 10 years to reach parity with Nvidia GPU’s (by M4/M5?), a Apple modem of some type is coming, when the Apple Vision Pro is released, it will become apparent that Apple will have/need to design a in house modem, if they ever hope to fit a future generation of the Apple Vision Pro onto a frame of glasses that’s the endgame, and to do that takes time, that’s how playing the long game works.
The Apple in house modem is just a subset of a family of much bigger long term projects within Apple, project in house modem is at least 5 years old so what? Project Apple Vision Pro is at least 8-10 years old.
Intel isn’t dead but what they are is disrupted going forward over the long haul and the same applies to AMD, Nvidia, and Qualcomm, GPU parity, and some type of competitive Apple modem in the future is inevitable, the disruption is the pairing of the in house Apple OS’s with Apple designed hardware.
Over the years, Apples acquisitions have been carried out to support existing projects within the company you won’t find any big flashy $69 billion acquisitions and then try to fit them in later, Apple executes the long game.
https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Apple
Intel is disrupted and they are currently scrambling along with AMD, laptops made with their CPUs simply don’t compare to Apples laptops when you actually unplug them from a wall and used them as a mobile computer, the only thing they can brag about is you can play a AAA games/3-D ray tracing using Nvidia or AMD GPU chips plugged into a wall, the race is on who can get there first can Intel/AMD right the ship or can Apple get to GPU parity first?