Sept 12 (PCB UNION) - Qualcomm (QCOM.O) said on Monday it had signed a deal with Apple (AAPL.O) to supply 5G chips until at least 2026, at a time when the iPhone maker faces increased challenges in China and looks to reinforce its supply chains elsewhere. The terms of the deal were not made public but Qualcomm said they were similar to the original deal struck in 2019.

The deal extends a relationship worth billions of dollars to Qualcomm for at least three years beyond what was expected and indicates Apple is not rushing out its own modem, despite moving all its computers to processing chips of its own design.

“This agreement reinforces Qualcomm’s record of sustained leadership across 5G technologies and products,” the San Diego-based chipmaker said.

Apple is Qualcomm’s largest customer, accounting for nearly 25 percent of its revenue, and it was expecting that the iPhone 15—which is being launched on Tuesday—would be among the last to rely on its modems.

The two companies were locked in a range of high-profile intellectual property and contract disputes around the world until striking an accord in 2019. At that time, they said they had struck a “multiyear chipset supply agreement.”

Months later, however, Apple stepped up its modem development plan when it bought Intel’s smartphone chip business in a $1 billion deal.

The new Qualcomm deal leaves open the prospect of Apple phasing in its own chips into its smartphones over the next three years if they are ready.

Qualcomm said its long-term financial planning assumption was that it would supply 20 percent share of the relevant chips for the smartphone launch in 2026.

Its in-house project to make chips, dubbed Apple Silicon, has yielded strong results for several years in the iPhone’s core processors. More recently it has adapted those chips for its Macs, replacing Intel as the primary workhorse in its desktop and notebook computers.

Qualcomm’s shares jumped as much as 8 percent in pre-market trading on Monday’s news before paring some of their gains. The shares were up 3 percent by late morning in New York.

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