Apple to Use Qualcomm Chips for 3 More Years... "In-House Communication Chip Development Faces Difficulties"

Apple has decided to use Qualcomm's 5G smartphone communication chips for three more years. It appears that Apple's plan to develop its own communication chips to be installed in the iPhone is facing difficulties. Qualcomm's stock price surged immediately on the New York Stock Exchange.

On the 11th (local time), Qualcomm announced that it had signed a 5G communication chip supply contract with Apple. Accordingly, Qualcomm plans to supply communication chips for iPhones to Apple for three years from next year until 2026. Although specific contract terms were not disclosed, the company confirmed that they are similar to the existing contract from 2019.

This is seen as indicating that Apple's communication chip development is slower than expected. The original supply contract between the two companies was scheduled to expire this year. Bloomberg News reported, "The new iPhone launching the next day was expected to be the last iPhone using Qualcomm chips," adding, "This signals that Apple's ambitious effort to develop its own chips is taking longer than expected." The Wall Street Journal (WSJ) also reported that "Apple's efforts have not yet borne fruit." Communication chips are known to be particularly difficult to develop among various semiconductors used in mobile phones.

Apple started a project to develop its own communication chips in 2018. In 2019, it accelerated this by acquiring the smartphone communication chip business from Intel for $1 billion (approximately 1.3 trillion KRW). Apple's goal is to reduce external dependence while implementing performance optimized for individual devices. Later, in 2020, Apple introduced its self-developed system-on-chip (SoC, a technologically intensive semiconductor that integrates multiple system functions into a single chip) 'M1' by installing it in laptops such as the 'MacBook Air' and 'MacBook Pro' instead of Intel chips.

With Apple deciding to use Qualcomm chips for three more years, Qualcomm's stock price rose nearly 4% compared to the previous session on the New York Stock Exchange that day. According to UBS, about 21% of Qualcomm's fiscal year 2022 revenue came from Apple. Apple is scheduled to announce the new iPhone 15 series the next day.