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Apple has renewed its contract with Qualcomm to receive modem supplies for another three years. Initially, the modem agreement between the two parties was only valid until 2023. Qualcomm has now announced that Apple has extended the contract until 2026.
Apple has been working on developing its own in-house modem for nearly three years. There were speculations that the fourth generation of the iPhone SE could be the first device to feature Apple’s self-developed modem and potentially launch as early as 2025. However, it appears that Apple is still facing challenges with its modem production and will continue to rely on Qualcomm.
Qualcomm Will Supply Modems to Apple Until 2026
Apple’s plans to develop an in-house modem date back to 2019 when the company acquired Intel’s Modem division. Through a multi-billion dollar deal with Intel, Apple purchased a majority 51% stake in Intel’s modem business and gained exclusive ownership of all patents and intellectual properties.
Apple Analyst Ming-Chi Kuo had previously reported that Apple could start using its in-house modems by 2025. He also mentioned that the fourth generation of the iPhone SE is expected to be the first Apple device to feature the new modem, with a launch in Q1 2025. However, according to Qualcomm’s recent announcement, it seems that Apple will not be transitioning to its own modems anytime soon.
Since the iPhone 12, Qualcomm has been the sole supplier of 5G-enabled modems to Apple. In fact, Apple is Qualcomm’s largest customer, accounting for 22.3% of Qualcomm’s chip business orders, as reported by Bloomberg.
Apple has been striving to develop each component in its own foundries and reduce its dependence on third-party suppliers. However, the modem is a vital component of the iPhone as it affects various aspects of its performance, including network reception, spectrum compatibility, and most importantly, battery life.
Qualcomm is the most experienced player in the modem business and holds a monopoly in this segment. The company has access to the most advanced modem technologies, making it sensible for manufacturers like Apple and Samsung to source modems from Qualcomm instead of developing their own.
Apple’s Trillion Dollar Plan to Become Self-Sufficient
Since 2010, Apple’s long-term vision has been to develop every single component inside its devices on its own. Apple was one of the first phone manufacturers to start developing in-house phone processors with the introduction of the Apple A4 chip in April 2010.
Apple has proven its capability to produce its own chips, as demonstrated by the launch of the M1-silicon chip for MacBooks in 2020. By completely eliminating its reliance on Intel’s desktop processors, Apple’s M-Series desktop chips have become known as one of the most powerful processors for computers.
Apple is also planning to develop its own displays. Currently, Apple sources its display panels from Samsung, LG, BOE, and Sharp. However, there are reports suggesting that Apple may introduce its own micro LED display in 2024.
With a current valuation of $2.8 trillion, Apple has a substantial cash treasury and extensive resources resulting from its business growth over the years. The company has made significant investments in research and development to develop its own parts, and this strategy has proven successful. Apple is expected to continue on this path and achieve complete self-sufficiency as early as 2030.