Report: Apple to roll its own modems

Probably not in time for 5G, but better late than never.

From Reuters’ “Apple puts modem engineering unit into chip design group“:

Apple Inc has moved its modem chip engineering effort into its in-house hardware technology group from its supply chain unit, two people familiar with the move told Reuters, a sign the tech company is looking to develop a key component of its iPhones after years of buying it from outside suppliers.

Modems are an indispensable part of phones and other mobile devices, connecting them to wireless data networks. Apple once used Qualcomm Inc chips exclusively but began phasing in Intel Corp chips in 2016 and dropped Qualcomm from iPhones released last year…

Apple’s investment in modem chips comes as carriers and other phone makers are rolling out devices for the next generation of faster wireless networks known as 5G. Rival handset makers Samsung Electronics Co Ltd and Huawei Technologies Co Ltd already make their own modems.

My take: According to The Information, which reported late last year that Apple headhunters were looking for a cellular modem systems architect, it could take Apple three years before its iPhone modems are ready.

5 Comments

  1. Fred Stein said:

    Great. More integration at SoC makes for better power management, especially for wearables and perhaps IoT, perhaps healthcare related products. None of the long-term upside potential is built into analysts DCF models.

    3
    February 7, 2019
  2. Gregg Thurman said:

    My take: According to The Information, which reported late last year that Apple headhunters were looking for a cellular modem systems architect, it could take Apple three years before its iPhone modems are ready.

    I don’t see it taking that long. Apple has been contracting with Qualcomm and Intel for modems built to Apple’s specs for years, implying some knowledge in modem design already existing at Apple.

    Building on that knowledge by increasing Apple’s technical expertise could result in an Apple 5G modem in 2 years. Apple is already expanding its modem design expertise by opening a San Diego (Qualcomm’s backyard) office and has made several key hires to lead that project.

    Considering the time it will take to implement 5G throughout the world two years is not too long to wait.

    1
    February 7, 2019
  3. Kathy Corby said:

    So the talking heads on CNBC, TDAmeritrade traders’ TV, MSNBC, etc. keep castigating Apple for being late to the game with 5G. Does anyone here remember why it is that the iPhones of 2019 are said to be skipping the 5G capability, when competitors seem to find it worthwhile to proceed with it? Even if the functionality is limited by incomplete carrier rollout, it seems as if the lack will just further depress iPhone purchases this year, among customers ready to upgrade who would buy 5G phones in anticipation. (Asking for a friend…)

    0
    February 7, 2019
    • Gregg Thurman said:

      Kathy, while I agree that the lack of 5G capability may negatively impact iPhone sales, I don’t see such impact as being material to Apple’s financial performance.

      I see iPhone sales being upgrades vs expansions of new users. Thus iPhone sales will be upgrade driven of today’s iPhone XS models moving down the price ladder as new models are introduced. I do not see 5G as an upgrade catalyst as there hasn’t been a compelling use case for the technology proffered outside of upload and download speeds.

      As to Apple’s decision to forego 5G in the upcoming iPhone refresh I think it has everything to do with its battle with Qualcomm. Qualcomm doesn’t just license its IP, it requires that you also buy its chip set. Apple is clearly wanting to develop its own modems (as do Samsung and Huawei) but needs to license Qualcomm IP if for no other reason than to forestall potential patent infringement allegations.

      If Qualcomm’s IP were determined to be industry essential the Courts could force FRAND pricing, having the effect of lowering Apple’s modem costs from about $20 per to about $2 per.

      Add to the savings Apple would experience developing its own modems, I think Apple has ideas stemming from its co-development of modems with Qualcomm that it doesn’t want to share with Qualcomm engineers.

      As for the talking heads I ignore their collective “wisdom” regarding Apple’s product pipeline. They’re just not that smart

      3
      February 7, 2019
      • Alan Birnbaum said:

        Fosspatents.com is an excellent, though opioniated, source that i look at re: QCOM vs APPL

        0
        February 7, 2019

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