Qualcomm (QCOM) shares edged up 0.2% on Thursday after the chipmaker confirmed the renewal of its global patent licensing agreement with Apple (AAPL). The renewed deal takes effect on April 1, 2027, extending the arrangement that has governed the two companies' relationship since their 2019 settlement and handing investors a measure of clarity on a partnership that has been anything but smooth over the years.

The modest gain stood out against a rough backdrop, as the broader Nasdaq 100 slid during the session. Qualcomm still managed to claw back some ground on the announcement alone, even though neither company disclosed the financial terms or the duration of the new agreement.

“We are pleased to extend the Apple license agreement,” said John Han, Qualcomm's Executive Vice President and General Manager of Technology Licensing.

A Partnership Forged in Litigation

The relationship between the two companies has a complicated history. Apple sued Qualcomm in 2017, calling its royalty model excessive, and the two sides fought the case out in court for two years before settling in 2019. That settlement laid the groundwork for the licensing relationship the companies maintain today.

Since then, Apple has worked steadily to cut the cord. The iPhone maker bought Intel's modem business and has been rolling out its own in-house “C1” cellular chips, with a straightforward goal: stop paying Qualcomm every time an iPhone ships.

The effort has not fully succeeded. Only the U.S. models of the iPhone 18 Pro Max still carry a Qualcomm modem, while the rest of the lineup runs on Apple's own silicon. Even so, Qualcomm holds foundational patents for cellular connectivity that Apple cannot simply design around.

That is what the new agreement covers. The deal is not about chips — it is about the patents Apple's devices rely on regardless of whose modem is inside them. Agreements of this kind persist because cellular devices are built to industry-wide standards: whichever company supplies the modem, a connected device still draws on the underlying patents. That is the royalty stream the renewal preserves as Apple's hardware grows more self-sufficient.

Looking Past Apple

Qualcomm CFO Akash Palkhiwala was quick to frame the Apple news as one piece of a larger strategy. Speaking with TheStreet at the Snapdragon Summit 2026, he laid out a plan to turn Qualcomm into what CEO Cristiano Amon calls 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 side of the business has not been kind lately. Qualcomm's handset chip sales dropped 20% year over year to $5.1 billion in the fiscal third quarter, weighed down in part by weaker demand and rising memory costs.

Automotive, by contrast, has been the bright spot so far. The segment posted $1.59 billion in revenue, up 61% from a year earlier, and Qualcomm expects it to reach $10 billion annually by fiscal 2029.

The Data Center Push

Data center revenue did not figure in July's earnings report, but it sits at the heart of where Qualcomm wants to go. Palkhiwala said the segment is expected to contribute $15 billion toward the company's $40 billion non-handset revenue target by fiscal 2029, a sharp increase from the prior goal of $22 billion.

“We were previously not in the data center business, so that drives most of the increase,” he said.

Earlier this month, Qualcomm struck a deal with Amazon (AMZN) to build custom silicon for AI data centers. Palkhiwala confirmed that the company is also working with Meta (META) and one additional hyperscaler that has not yet been named.

He showed little concern about the possibility of cuts to AI spending elsewhere in the industry. “These companies are excited to be working with us and we see data center and AI as a tremendous opportunity,” Palkhiwala said, adding that robotics could open another growth lane down the road that is not yet counted in the current $40 billion target. From here, the observable milestones are straightforward: the naming of the still-anonymous third hyperscaler, and the first earnings report to include data center revenue, which July's did not.

Source: CoinCentral