Qualcomm and Apple recently decided to end their longstanding dispute and soon afterward, Intel announced it's exiting the 5G smartphone modem business. While the reason behind the decision seemed fairly obvious at that time, Intel’s CEO Bob Swan has now explicitly confirmed that now that Apple and Qualcomm have decided to rekindle their partnership, the company won’t be able to make money off of 5G phone modems.
When relations between Apple and Qualcomm turned sour, the Cupertino giant turned to Intel. However, the company was apparently struggling with XMM 8160, the 5G chip that was supposed to go inside the 2020 iPhones.
Lately, there had been countless rumors suggesting that Intel's 5G chip won’t be ready in time for next year’s iPhones. In fact, Apple was also said to be looking for alternatives and was reportedly in talks with MediaTek and Samsung to pick up the slack.
When it comes to mobile chips, especially modems, Qualcomm is the undisputed leader. Sure, Huawei is also making moves, but Qualcomm is definitely leading the charge when it comes to 5G. In fact, it was also reported that the Chinese company was willing to make an exception and provide chips to Apple, but given the ongoing tensions between the U.S. and China, this settlement might not have worked out.
Perhaps this is what forced Apple to bury the hatchet and enter a six-year license agreement with Qualcomm. The companies had been engaged in a bitter legal batter since 2017, with Apple accusing the chip maker of unfair royalties and Qualcomm holding its ground by saying that the iPhone wouldn’t have been possible in the first place without its technology.
Now that a settlement has been made, Qualcomm would once again be supplying modems for iPhones. However, it appears that it’s a bit too late for the company to supply components for this year’s iPhones and thus Intel will presumably provide 4G LTE modems for the upcoming models.
This means that this year’s iPhones won’t be 5G-ready, but given the fact that 5G services have just started rolling out and aren’t expected to become mainstream until 2020, this might not matter to iPhone fans.
Apart from Qualcomm, Samsung is also speculated to provide 5G modems to Apple in 2020 for its iPhones as the company usually splits orders between multiple suppliers. This helps the iPhone maker avoid supply-side uncertainties and negotiate better pricing.
As for Intel, bowing out of the 5G modem business could actually prove to be good, if the reaction of Wall Street analysts is to go by. Although Apple was a major customer, it was Intel’s only one, and now that the iPhone maker has made peace with Qualcomm, it doesn’t make sense for Intel to stay in the game.
The company was apparently suffering annual losses to the tune of $2 billion in the smartphone modem business and now that it has decided to quit that venture, it can concentrate more on its core business of making processor chips for desktops, notebooks, and servers, which is its main bread and butter. Although the company has bid adieu to the 5G smartphone business, it will continue to make 5G modems for PCs, IoT devices, and networking and infrastructure products.