Apple Renews Qualcomm Deal: iPhone Launches Until 2026
3 min read
31 May 2024
By Tim HusseyIn a move that has significant implications for the smartphone industry, Apple and Qualcomm have announced the renewal of their licensing and chipset supply agreement. This agreement ensures that Qualcomm will continue to supply modems for Apple's iPhones, securing a critical component of Apple's product lineup. The deal also includes a settlement of all ongoing litigation between the two tech giants, marking the end of a bitter legal battle that lasted for years.
The Background: A Long-Standing Legal Battle
The legal dispute between Apple and Qualcomm began in earnest in 2017 when Apple accused Qualcomm of unfair licensing practices and overcharging for its modem chips. Apple claimed that Qualcomm was abusing its dominant position in the market and sought billions of dollars in damages.
Qualcomm countersued, alleging that Apple was infringing on its patents and seeking import bans on certain iPhone models. The legal battle escalated further when Apple began using Intel modems in some iPhone models as an alternative to Qualcomm's chips.
This legal dispute had significant consequences for both companies. For Apple, it raised questions about the stability of its supply chain and access to crucial modem technology. For Qualcomm, it threatened the lucrative revenue stream it derived from licensing its technology to smartphone manufacturers.
The Settlement: A Win-Win for Both Companies
In April 2019, just as the legal battle was set to go to trial, Apple and Qualcomm surprisingly announced a settlement. As part of the agreement, Apple agreed to pay Qualcomm an undisclosed sum (reported to be in the range of $4.5 to $4.7 billion) to resolve all litigation between the two companies. Additionally, the companies entered into a six-year licensing agreement with an option for a two-year extension and a multi-year chipset supply agreement.
The settlement not only put an end to the legal disputes but also significantly strengthened Qualcomm's position in the 5G market. As the rollout of 5G networks was gaining momentum, having Apple as a customer became even more critical for Qualcomm, given the company's expertise in 5G modem technology.
The Implications: Apple's 5G Future
The renewed agreement between Apple and Qualcomm has profound implications for the smartphone industry, particularly as it relates to 5G technology.
Stability for Apple: Apple can now rely on Qualcomm as a stable and reliable source of 5G modem chips. This ensures that Apple can keep pace with the adoption of 5G technology without the risks and uncertainties associated with switching suppliers or developing its modems.
5G iPhone Launches: The settlement between Apple and Qualcomm paved the way for Apple to release its first 5G-enabled iPhone models in 2020. The iPhone 12 and subsequent models have incorporated Qualcomm's 5G modems, allowing Apple to offer faster wireless connectivity and capitalize on the growing 5G ecosystem.
Competitive Advantage: By leveraging Qualcomm's expertise in 5G technology, Apple gained a competitive edge in the smartphone market. The company was able to offer 5G iPhones with strong performance and compatibility with a wide range of 5G networks worldwide.
Market Implications: Apple's decision to settle and continue its partnership with Qualcomm sent a signal to other smartphone manufacturers about the importance of Qualcomm's 5G technology. This strengthened Qualcomm's position as a leading provider of 5G modems and chipsets, with its technology being widely adopted across the industry.
Future Collaboration: The renewed agreement not only covers the supply of modems but also includes provisions for potential collaboration on future technologies. This suggests that Apple and Qualcomm may work together on advancements in wireless technology, further solidifying their relationship.
Looking Ahead: The Road to 2026
With the renewal of their agreement, Apple and Qualcomm have set the stage for a partnership that will extend until at least 2026. This long-term commitment provides both companies with the stability and certainty they need to plan for the future.
For Apple, it means a continued focus on delivering cutting-edge 5G technology in its iPhones, ensuring that its devices remain competitive and attractive to consumers worldwide. The partnership also offers Apple the opportunity to explore and innovate in areas beyond just modem technology.
For Qualcomm, the agreement secures a prominent customer for its modem chips and reinforces its position as a leader in 5G technology. The collaboration with Apple could lead to further advancements in wireless communication, benefiting not only the two companies but also the broader tech industry.
In conclusion, the renewal of the agreement between Apple and Qualcomm marks the end of a contentious legal battle and the beginning of a long-term partnership that will shape the future of iPhones and wireless technology. As 5G continues to evolve and become increasingly integral to our connected world, this partnership ensures that Apple's iPhones will remain at the forefront of innovation and connectivity until at least 2026.
