TLDR
- Qualcomm extended its worldwide patent licensing partnership with Apple, beginning April 1, 2027.
- QCOM shares gained 0.2% on the announcement despite broader tech market weakness.
- The companies did not reveal financial details or the length of the extended partnership.
- Apple continues developing proprietary modem technology but remains dependent on Qualcomm’s cellular patents.
- Qualcomm aims for $15 billion in data center revenue by the end of fiscal 2029.
Qualcomm (QCOM) shares edged up 0.2% Thursday following confirmation that the chipmaker has extended its patent licensing partnership with Apple (AAPL). Set to commence on April 1, 2027, the agreement provides investors with renewed certainty about a relationship that has seen significant turbulence over the years.
Both companies opted not to disclose financial specifics or the duration of the extended arrangement. Nevertheless, the announcement provided enough support for Qualcomm to post modest gains while the broader Nasdaq 100 faced headwinds.
The Apple-Qualcomm relationship has long been complex and contentious. In 2017, Apple initiated legal action against Qualcomm, challenging its royalty structure as unreasonable. The legal battle persisted for two years until both parties reached a settlement in 2019, establishing the framework for their current licensing arrangement.
Following that settlement, Apple has aggressively pursued independence from Qualcomm. After acquiring Intel’s modem division, the tech giant began deploying its proprietary “C1” cellular chips across its product line. The objective is straightforward: eliminate ongoing Qualcomm payments tied to every iPhone sale.
However, Apple hasn’t achieved complete independence yet. Currently, only the U.S. variant of the iPhone 18 Pro Max continues to utilize a Qualcomm modem, while other models operate on Apple’s in-house technology. Despite this progress, Qualcomm maintains essential cellular connectivity patents that Apple cannot circumvent through internal development.
This newly extended agreement addresses those patent rights. The focus isn’t on physical chips but rather the intellectual property Apple’s products require, irrespective of which company manufactures the modem inside.
“We are pleased to extend the Apple license agreement,” said John Han, Qualcomm’s Executive Vice President and General Manager of Technology Licensing.
Qualcomm diversifies beyond Apple dependency
Qualcomm CFO Akash Palkhiwala emphasized that the Apple announcement represents just one element of a broader strategic transformation. During a conversation with TheStreet at the Snapdragon Summit 2026, he outlined the company’s roadmap to evolve into what CEO Cristiano Amon describes as a “platform company.”
“In the next two years, we’ll become this company with three major businesses: data center, smartphones, and auto/IoT,” Palkhiwala said. “Think of it as three legs of the stool with each almost equal in size.”
The smartphone division has faced recent headwinds. Qualcomm’s mobile chip sales declined 20% year-over-year to $5.1 billion during the fiscal third quarter, impacted by softening demand and increasing memory component costs.
In contrast, the automotive sector has emerged as a strong performer. This division generated $1.59 billion in revenue, representing a 61% increase from the previous year, with Qualcomm projecting annual revenue of $10 billion by fiscal 2029.
Aggressive data center expansion
While data center revenue wasn’t broken out in July’s quarterly results, it represents a cornerstone of Qualcomm’s future strategy. Palkhiwala revealed that the segment is projected to contribute $15 billion toward the company’s $40 billion non-handset revenue objective by fiscal 2029, a significant increase from the previous $22 billion target.
“We were previously not in the data center business, so that drives most of the increase,” he said.
This month, Qualcomm announced a partnership with Amazon (AMZN) to develop specialized silicon for AI-powered data centers. Palkhiwala confirmed ongoing collaborations with Meta (META) and an additional major cloud provider that hasn’t been publicly identified.
He dismissed concerns about potential reductions in AI infrastructure spending. “These companies are excited to be working with us and we see data center and AI as a tremendous opportunity,” Palkhiwala stated, noting that robotics represents another potential growth avenue not yet factored into the current $40 billion projection.
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