Update: In an interview with The WSJ, Intel’s Bob Swan says the Apple vs Qualcomm settlement led to Intel’s exit from the 5G market, not vice versa:
“In light of the announcement of Apple and Qualcomm, we assessed the prospects for us to make money while delivering this technology for smartphones and concluded at the time that we just didn’t see a path,” Mr. Swan said.
It’s been an eventful two weeks for the smartphone modem business. Apple and Qualcomm reached a surprise settlement and Intel subsequently left the 5G smartphone modem business. Now, Intel says that it still plans to supply 4G modems through this year – likely including the 2019 iPhones.
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As noted by Reuters’ Stephen Nellis, Intel CEO Bob Swan commented on the company’s smartphone modem plans during Intel’s Q1 2019 earnings call. Swan explained that the second iteration of Intel’s XMM 7660 modem is on track for the this fall, noting that the company currently expects to supply 4G modems through this year:
“Our expectation is we will continue to deliver on the 4G modem throughout the course of this year, including the second iteration of that product coming in the fall back to school season.”
Given that Swan’s comments relate to the second iteration of the XMM 7660, it seems highly likely that Intel will supply modems for the 2019 iPhones. It’s far too late in the 2019 iPhone cycle for Apple to make the switch to Qualcomm this year given required engineering lead times. At best, it is possible that Qualcomm will provide a portion of iPhone modems this year, but that too seems unlikely.
Going forward, however, it seems all-but-certain that Apple will switch to Qualcomm when it comes to 5G modems in 2020. Apple is also developing its own in-house modems, but those efforts are likely several years down the road at this point. Intel announced earlier this month that it will exit the 5G smartphone modem business because there was “no clear path to profitability” for its efforts.
When Intel announced its exit from the 5G modem business, it promised to “meet current customer commitments for its existing 4G smartphone modem product line.” The question was whether that extended to new products as well.
Apple and Qualcomm’s settlement, announced last week, included a one-time payment from Apple to Qualcomm. The two parties also reached a six-year license agreement effective April 1, 2019, as well as a two-year chipset supply agreement.
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