Qualcomm: Apple to roll 80% of its own modems by 2023

From Christopher Mims' "Apple’s Not-So-Secret Plan to Take Another Gigantic Bite of the Microchip Market" in the Weekend Wall Street Journal:

Apple has shown it can design the brains of its devices, and is now poised to do something potentially even harder: create the chips that enable them to communicate with the internet.

A series of moves by the tech giant, as well as signals from its suppliers, make clear that it aims to start designing the modems of the iPhone, iPad and Apple Watch. Doing so could enable a future of always-on smart glasses and augmented reality, more wearables with their own independent connection to cellular networks, Mac laptops with 5G connectivity, and faster-than-ever downloads and streaming on its flagship iPhones.

But first, the company must accomplish something that has defeated other tech giants, including Intel It must show that not only can it design its own wireless modems, but that it can make them good enough to justify switching away from the ones Apple now uses, which are made by Qualcomm, for decades the world’s dominant modem-chip maker...

In November 2021, Qualcomm’s chief financial officer said the company expected to supply 20% of the 5G modems Apple uses in its mobile devices in 2023. Currently, Qualcomm supplies nearly 100% of these chips. (The exception is the Apple Watch, which since the Series 4 model has used an Intel modem.) While it’s possible that Apple could be planning to use 5G modems from another supplier starting in 2023, analysts are expecting that will be the year it reveals its own, Apple-designed modem.

My take: Nobody should be surprised. Buying Intel's modem division -- and its 2,200 employees -- was a dead giveaway.

 

9 Comments

  1. Robert Paul Leitao said:
    Not only does this provide Apple with the ability to better control advances in the company’s products and the timetable for the release of updated products, owning the modem designs and contracting directly for manufacturing of the modems dramatically reduces costs while enabling cellular connectivity on more of the company’s current and future products.These steps are huge and necessary.

    3
    April 30, 2022
  2. Tommo_UK said:
    Never one to blow my own trumpet but I did write a blog about this way back in 2008 when 3G was taking over from Edge and Apple were visibly frustrated at the lack of speed of modem speed evolution.

    I predicted within 10 years Apple would own the entire chipset in its iOS devices and then Macs and was rather mocked at the time by some of those who I know are reading this.

    As I’ve said many times, Apple’s early and pioneering involvement with ARM, even though it later sold its stake, gave it unparalleled insight into the challenges it would face ahead and while the world thought Apple’s big trick was to seamlessly transition from PowerPC to Intel, the real work which had never stopped since the early days of working on the Newton in the nineties was the vertical integration into a stack of ARM based designs which over time were cast on smaller smaller footprints so they could be fully integrated ICs not just stacked chipsets.

    We’re seeing the outcome of 30 years of planning pay off, and there isn’t anyone even close to Apple’s expertise in breadth and depth of expertise in cores systems design, chipset innovation, integrated OS solutions and how that evolves into the products the company can now begin to forward plan. I think the last few years have been evolutionary, as is Apple’s normal MO. The next few years are set to be revolutionary power/performance wise together with what I feel is going to be a more aggressively affordable product lineup now the company has worked out how to make a decent margins from lower cost products.

    Interesting times. Now TC, please remove the revolting 30% extra tax you slapped on U.K. Mac and iPhones in 2016 when the pound plunged for a bit post-Brexit, or you’re going to find headlines like “Apple takes a double bite out of U.K. consumers pockets” start gathering the interest of … yes .. regulators.

    4
    April 30, 2022
    • David Emery said:
      I mostly agree with you.

      BUT I note there has been A Lot of R&D into “software defined radio (SDR)” over the last 15-20 years, across the industry (defense and commercial.) Qualcomm’s patent portfolio and (very aggressive/restrictive) licensing has given it a lot of choke-hold in the commercial space. I suspect that a big part of the problem would be any competitors would have to get expertise in SDR, in hardware/software integration, AND in patent litigation to have a chance to break into this space.

      Thus I suspect the technical hurdles are only part of the story here.

      0
      April 30, 2022
    • David Drinkwater said:
      ON the technology side, I agree with you: we are just starting to see the fruit of “old” plans. I won’’t claim to know how old, but I am sure there is a core group of chip design engineers who are working today on things that we will not see for five years. There are many layers of development to achieve, not the least of which is scale manufacturability.

      On the political side, the UK has reaped the rewards of its own stupidity with BREXIT. (This is not aimed at you, personally, in any way Tommy.) The Pound tanked, because BREXIT was a bad idea, and now, the UK has no reasonable reason to expect the EU to be helpful or to work with the UK on the pricing penalties that BREXIT has earned.

      I apologize for the rant, but as a born American with and English father, I do carry a UK passport issued from London. If I could have voted on the issue of BREXIT, I would surely have voted BREMAIN.

      0
      May 1, 2022
  3. Michael Goldfeder said:
    My thought is that many of these “smaller” companies that Apple has been acquiring over the years has put them into an advantageous situation to vertically integrate all of these component part operations themselves beyond just the Intel division purchase. When Apple resolved their litigation with Qualcomm back in 2019, they were probably well on the road to eventually terminating them as a vendor and bringing these operations in house. Tim Cook at his best IMO.

    It was amusing listening to a recent Bloomberg interview with Qualcomm’s new CEO, Cristiano Amon, and hearing him crowing about their new business relationships with all of the non iOS Android phone manufacturers. It was reminiscent of someone going into a fancy NYC steakhouse and ordering a plate of vegetables then saying they had a very sumptuous meal. To each his own as they say.

    2
    April 30, 2022
  4. Fred Stein said:
    The other shoe to drop – migration to 3nm.

    By integrating 5G with A/M-series on 3nm, SoC’s Apple’s widens their power performance lead on all devices, especially Watches and SmartPhones.

    Qualcomm’s cup is not 20% full, its 80% empty. 80% of Apple’s 5G devices will use Apple modems in 2023.

    Hopefully WWDC gives visibility into 3nm.

    0
    April 30, 2022
  5. John Konopka said:
    The engineering that goes into this is mind boggling. To get thousands of engineers across multiple disciplines to collaborate successfully to produce items like the M1 Ultra is awesome. This is the miracle of the modern age but few people can appreciate it. Unlike great buildings or bridges that are visible landmarks these products are really tiny and ubiquitous and if they work well they don’t draw attention to themselves.

    6
    April 30, 2022
    • David Drinkwater said:
      If “It just works”, people don’t notice.

      People rarely call customer service to say “thank you”.

      2
      May 1, 2022
  6. David Drinkwater said:
    What I’m thinking on with this (the release of Apple cellular and/or WiFi chips) is that Apple has the opportunity to achieve massive power (“efficacy”: more) and energy (usage: less) improvements. They have proven to do very well so far with M1 silicon.

    I don’t think they can collocate intelligence ICs and communication (cellular/WiFi) chips on a single piece of silicon, because I believe that a lot of radio stuff is GaAs based, but if they can reduce and totally control the chipset and thereby the communication between all those various chips, thoroughly mathematically modeled (on a Mac, to be sure! :), I am 100% confident that they can reduce the volume of all of that, leaving more room for battery and other features like screen and sound output.

    0
    May 1, 2022

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