Qualcomm stock pops on Apple supply deal
Shares of Qualcomm (QCOM) jumped on the news that it will provide Apple (AAPL) with 5G chips for the iPhone through 2026. It could be a sign that Apple isn't quite ready to start going it alone on chips quite yet. Yahoo Finance Live breaks down the stocks' reactions.
Video Transcript
- Qualcomm, those shares are higher this morning by about 3 and 1/2% after it struck a deal, really an extension of its deal with Apple. The semiconductor giant will supply Apple with its 5G chips until at least 2026. That deal indicating that Apple maybe isn't quite ready to rely on its own in-house chips just yet.
Now, to be specific here, what Qualcomm makes for Apple is modem chips. That has something that Apple has said it wanted to explore making on its own. It bought a division from Intel to that effect. But this is a highly complex thing that it has to make. So there was some question over whether Qualcomm would continue to have this partnership. Now it's being extended through 2026. So good news for the chipmaker.
- Yeah. Some interesting notes here as well from our executive editor who was able to touch base with the company. Saying that on the financial front, it seems like that this new deal has a similar structure to the existing deal. No major changes there. But Apple's deal is not necessarily factored fully into the company's current guidance. Some of that guidance had included an outlook expecting to drivers of sequential revenue growth.
They talked about this on the earnings call. [INAUDIBLE] seasonality was one of those. Handset launched by a modem-only customer was the other one. And so that potentially where investors might be trying to read through the lines of what was talked about in the most recent earnings call and trying to put that together with what's been announced this morning.
- Yeah. According to Bloomberg estimates, Qualcomm makes up almost a quarter of Qualcomm's revenue. So Apple--
- Apple.
- Wait. Did I say that-- Apple makes up about a quarter of Qualcomm's revenue. So a lot.
- Yes.
- They're very reliant on the company. No financial terms disclosed. But effectively, this is just a relief for investors in Qualcomm that this is going to last a little longer. It was estimated that the partnership was going to end this year before this extension here. So, you know, Qualcomm gets to ride it a little longer.
- It's huge. Making sure that they've got a more solidified partnership with Apple, but then also at the same time, making sure that they've got for a different part of their business and the Snapdragon 5G modem-RF systems for smartphones from Samsung. Those deals run throughout '24, '25, and 2026 as well. So those two of the biggest smartphone manufacturers in the world, Qualcomm having both of them in their financials one way or
