Intel 5G Debacle Drove Apple to Cut a Deal with Qualcomm
By Jim Lundy
This wasn’t the way Apple thought things would work out relative to Qualcomm. 5G is coming like a freight train and there are few suppliers that will have a 5G cellular modem ready for Apple’s iPhones. Apple’s growing competitor Huawei makes its own. This blog discusses the deal Apple just did with Qualcomm and how it came to be.
Intel Misses the Mobile Era—Punts on 5G
At Mobile World Congress this year, Intel had a significant presence and was marketing its 5G offerings heavily. Less than 45 days later, they announced they were exiting 5G—leaving Apple, which does not make its own cellular modems—in a bind, given its licensing litigation with Qualcomm. Even before Intel’s announcement, the ability of Intel to even meet a 2020 delivery of an Apple 5G iPhone was described as shaky.
This effectively marks the end of a disastrous run for Intel. No smartphones use Intel processors and with its exit from the modem business, this marks the end of an ugly era for Intel. Some say Intel could not make money on modems. Qualcomm, on the other hand, has prospered.
Apple Resolves Licensing Issues with Qualcomm
The news last week was not about the pending court case between Apple and Qualcomm, it was about their new six-year agreement, bringing to an end some strong differences of opinion between Qualcomm CEO Steve Mollenkopf and Apple CEO Tim Cook.
To be clear, Apple had no choice but to make this move. Intel was late and struggling on 5G modems. Its LTE modems also were not as fast as Qualcomm. This also opens up a supplier question for Apple.
Huawei and Samsung Invest in 5G
Apple’s prime competitors, Huawei and Samsung, decided years ago to invest in 5g and make their own 5G modems. This raises an issue for Apple—with Intel punting on mobile altogether, should Apple itself get into the cellular modem business? While there are rumors that Apple is starting to develop its own cellular modem chipsets, these would not be available in 2020, so, for now, Apple is stuck with Qualcomm.
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Apple 5G iPhone Coming in 2020
The good news for Apple is that it can keep innovating with the iPhone. 5G isn’t an option for 2020 and now with the Qualcomm deal locked, Apple will be able to keep up with both Huawei and Samsung. The challenge for Apple is how will it differentiate against its two Asian competitors.