Lasting until March 2027 is a big date for QTL
Qualcomm returns to growth as it releases first quarter 2024 financial results. The restructuring is on track, with the company announcing sales of $9.92 billion and net income of $2.77 billion, above the high end of its guidance. A key announcement in the impressive quarterly results is that Apple will use Qualcomm’s 5G licenses until at least the end of Q1 2027.
This is a multifaceted announcement, as it means Apple will likely be using Qualcomm modems to that day, and more importantly, licenses from Qualcomm’s Technology Licensing (QTL) group. Even if Apple develops its own 5G modem, we believe it will have to continue using Qualcomm’s license after this date. Modems are very difficult, but Intel and Apple are proving us right. Apple still doesn’t have an in-house solution, even after introducing Snapdragon and several others for 5G over his five years.
“Apple has exercised a unilateral option to extend the Global Patent License Agreement for an additional two years, extending the existing agreement through March 2027.”
FY2024 is especially important for Qualcomm, as the company is pushing ahead with its commitment to great PCs with more CPU cores than Apple’s most powerful M3, scheduled to launch later this year. The auto industry is growing, and Apple’s entry into the virtual reality/augmented reality market with overpriced products creates a huge incentive for XR to grow.
Apple is known for being slow to market. Still, like tablets and watches, they tend to garner a lot of attention, resulting in a spike in developer interest for both Apple and its competitor ecosystem.
Based on previous experience, Apple will jump-start its interest in the XR market, enabling the growth of Meta, Xreal, and several other players in which Qualcomm plays a key role.
Long-term investors are paying off, and those on Wall Street are reacting positively.