No surprise. Intel confirms 5G smartphone modem exit, after Apple and Qualcomm kiss and make up
Intel has lost little time deciding its 5G future, after Apple and Qualcomm announced they had reached a settlement and would cease all legal action between the two.
That settlement included the fact that Apple has agreed to make an undisclosed payment to Qualcomm, and will use its chips going forward.
And this triggered a quick response from Intel after it announced “its intention to exit the 5G smartphone modem business.”
Apple has been using Intel chips ever since it dropped Qualcomm modems after its bust up with the firm.
But it seems that Apple was never really happy with Intel.
Last July for example it was reported that Apple was considering moving away from using Intel’s 5G modems in future iPhones.
And then earlier this month it was reported that Apple was losing confidence in Intel’s ability to hit its deadline for the 5G modems.
Apple reportedly wants to release its first 5G compatible iPhone in 2020, but the iPad maker was reportedly losing confidence in Intel’s ability to deliver the XMM 8160 5G modem for those 5G smartphones.
Essentially, in order for Intel to deliver huge numbers of those 5G modems in time for a September 2020 iPhone launch, the chip giant had to deliver sample parts to Apple by early summer 2019.
It then needed to deliver a finished modem design in early 2020.
Intel had said last November that it only expected to ship the 8160 5G modem in the second half of 2019.
It was reported then that Apple was apparently bolstering its in-house engineering team to between 1,000 and 2,000 engineers to work on its own 5G modem chip.
But the final straw for Intel was Apple reaching its settlement with Qualcomm.
For Intel, the Apple agreement has been problematic right from the start. Apple had reportedly already negotiated an attractive unit price for the 5G modems, leaving Intel with very little profit.
On top of that Apple also demanded that it had delivery priority over other Intel customers.
Hence Intel’s decision.
“Intel Corporation today announced its intention to exit the 5G smartphone modem business and complete an assessment of the opportunities for 4G and 5G modems in PCs, internet of things devices and other data-centric devices,” said Intel in a statement.
The firm said it would continue to invest in its 5G network infrastructure business, and would continue to meet current customer commitments for its existing 4G smartphone modem product line, but that it does not expect to launch 5G modem products in the smartphone space, including those originally planned for launches in 2020.
“We are very excited about the opportunity in 5G and the ‘cloudification’ of the network, but in the smartphone modem business it has become apparent that there is no clear path to profitability and positive returns,” said Intel CEO Bob Swan.
“5G continues to be a strategic priority across Intel, and our team has developed a valuable portfolio of wireless products and intellectual property,” said Swan. “We are assessing our options to realise the value we have created, including the opportunities in a wide variety of data-centric platforms and devices in a 5G world.”
Apple’s settlement with Qualcomm and agreement to use its 5G modem chips, even if it was reached through gritted teeth, does make sense for the iPad maker.
Apple could not source 5G modems from its bitter smartphone rival Samsung, which left it with few other options other than Intel or Qualcomm, or even MediaTek.
It could have used modems from another smartphone rival (Huawei), but that would have opened up lots of issues around American government security concerns about the Chinese firm.