Qualcomm surges after signing 3-year 5G-chip-supply deal with Apple

Qualcomm  (QCOM) - Get Free Report shares powered higher Monday after the network equipment chipmaker said it extended a contract with Apple for another three years.

Qualcomm said the new deal with Apple will see it supply its Snapdragon 5G modem chips for Apple iPhones launched over three years starting in 2024. Qualcomm added that its long-term financial planning assumption sees a 20% share of chipset supply for the smartphone launch in 2026.

Apple and Qualcomm signed their existing deal in 2019 following years of legal challenges over back-dated royalty payments linked to the patent dispute settlement. 

Qualcomm had filed complaints in both U.S. District Court and the U.S. International Trade Commission, arguing Apple had infringed on six of its patents that improve iPhone performance and battery life. Apple countered that it held at least eight battery life patents that Qualcomm had violated, and argued Snapdragon 800 and 820 processors infringed on those patents.

Qualcomm shares were marked 8.35% higher in pre-market trading to indicate an opening bell price of $115.26 each

Last month, forecast weaker near-term sales amid a pullback in smartphone demand following a mixed third quarter earnings update.

Qualcomm posted an adjusted bottom line of $1.87 per share for the three months ending in June, its fiscal third quarter, down 37% from last year but topping Street forecasts. Group revenues were down 23% at $8.45 billion, but narrowly missed analysts' estimates of an $8.5 billion tally.

Looking into the currency quarter, Qualcomm said it sees revenues in the region of $8.1 billion to $8.9 billion with an earnings mid-point of $1.90 per share. 

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