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.
Qualcomm shares jumped more than 8% in premarket trading in New York on Monday. Apple was up less than 1%. Some analysts expected the component to be ready for the 2023 iPhone, but Qualcomm quashed that speculation last year. Apple was still looking to ship the modem at either the end of 2024 or in early 2025, Bloomberg News previously reported. Now the project has a longer runway before it needs to be ready.It’s been a difficult undertaking: Apple needs a chip that can connect to various cellular networks globally without fail, while offering as good or better performance as Qualcomm.
The new agreement comes just a day before Apple’s biggest announcement of the year. The company is set to unveil the iPhone 15, as well as updated Apple Watches and AirPods, at a presentation Tuesday. It’s counting on the products to help reverse a sales slide that has lasted for three quarters. The iPhone is Apple’s largest single moneymaker, accounting for roughly half of its revenue.
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