Qualcomm has secured a three-year agreement with Apple to supply the iPhone maker with 5G communications chips, the latest hint that Apple's in-house efforts have yet to bear fruit. In a pact identical to a prior agreement between the firms, Qualcomm said it will supply Apple with modem chips for smartphone releases in 2024, 2025, and 2026.

 

Previous supply deals have proven profitable for Qualcomm but costly for Apple. According to a UBS estimate from last month, Qualcomm's modem sales to Apple were approximately $7.26 billion in its most recent fiscal year, or approximately 16% of its total revenue. Qualcomm, whose stock has dropped 20% in the last year due to falling smartphone demand, did not disclose the value of its latest transaction with Apple.

 

The acquisition, however, may signal that Apple's long-running quest to develop its own modems will not be making its way into the company's flagship phones anytime soon. Apple paid $1 billion for Intel's smartphone modem unit in 2019, taking on 2,200 employees and a patent portfolio. Intel had also struggled to create 5G modems, wasting roughly $1 billion each year in the process.

 

Apple has a lengthy history of developing its own technologies and relying less on third-party chip providers. It released its first processor chip for its iPad and iPhone products in 2010. These in-house mobile CPUs have helped Apple gain a performance and battery life advantage over its Android phone rivals over the years. The majority of Android phones rely on the same third-party chip providers, such as Qualcomm and Taiwan-based MediaTek.