Reputed Apple analyst Ming-Chi Kuo took to Twitter to speculate that Apple could use Qualcomm modems for its iPhone 15 models because its own efforts to develop a 5G modem chip “may have failed.”
Previous reports from Kuo and other reputed analysts suggested Apple is developing its own 5G modem so it can reduce dependency on external suppliers like Qualcomm. It would give the Tim Cook-led company more control over the hardware-software integration while strengthening its immunity against the ill effects of supply chain disruptions. Market analysts believed that since Apple would contract another manufacturer for 80 percent of the chips, Qualcomm would supply just 20 percent of the 5G modems for the iPhone 15.
In a series of tweets, Kuo says his latest survey indicates Apple’s efforts to develop its own modem have failed. So, the revised estimation is that Qualcomm will provide the Cupertino giant with 100 percent of the 5G chips for the 2023 iPhones. This position as Apple’s exclusive supplier could also translate into an uptick in the company’s financials in the second half of 2023 and the first half of 2024.
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[Company Update] Qualcomm (QCOM.O)My latest survey indicates that Apple's own iPhone 5G modem chip development may have failed, so Qualcomm will remain exclusive supplier for 5G chips of 2H23 new iPhones, with a 100% supply share (vs. company's previous estimate of 20%).
— 郭明錤 (Ming-Chi Kuo) (@mingchikuo) June 28, 2022
However, Kuo believes Apple doesn’t intend to immediately shelve the modem development project. He says the iPhone maker can eventually replace Qualcomm modems with an in-house creation. Still, by then, the latter’s business would have expanded sufficiently to offset the “negative impacts” caused by losing Apple’s contract for 5G chips.
Besides defending the company from supply chain challenges, a custom-designed communications modem would give Apple other advantages too. The iPhone 15 could be more battery efficient while delivering better performance., Financially, Apple could improve its product margins because it won’t be purchasing chips from Qualcomm.
Previous rumors suggested Apple would join forces with TSMC to make its custom-designed 5G modems. For now, Kuo believes Qualcomm is stepping in to save the day.
Update: Technical Roadblock or Legal Minefield?
It is known that Apple has been embroiled in legal battles with Qualcomm over patents pertaining to communication technologies. A recent report from Patently Apple suggests these legal issues and possible patent infringements could be holding the iPhone maker back from developing its own 5G modem. Further, a Foss Patents analysis corroborates the theory:
“The report specifically mentions two Qualcomm-owned 5G patents. It adds that hypothetically, Apple wouldn’t stand a chance if Qualcomm dragged the company to court for patent infringement. In a hypothetical 2025 or 2027 Qualcomm v. Apple infringement litigation, the two above-mentioned patents would most likely be asserted again. Frankly, I’d be surprised if they weren’t. The PTAB rejected Apple’s validity challenge, and Apple’s appeal went nowhere due to a lack of standing. Unless Apple can dig up some previously undiscovered prior art of enormous strength, those patents are going to be hard to challenge.”
Apple has an agreement with Qualcomm for licensed use of the latter’s communication technology patents. However, the possibility of renewal seems bleak since an appropriate payment cannot be decided by the parties.
