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Apple Considered 5G Modem Chips From Samsung, MediaTek, and Intel for 2019 iPhones

Qualcomm, Apple, and other suppliers are in court this week as Qualcomm faces off with the FTC over an antitrust lawsuit accusing the company of using anticompetitive tactics to remain the main supplier for baseband processor for smartphones.

Several Apple witnesses are testifying during the trial, which has led to the leak of some interesting, previously unknown information.


Apple supply chain executive Tony Blevins today said (via Reuters) that Apple considered purchasing 5G LTE modems from companies that include Samsung, MediaTek, and Intel for use in its 2019 iPhone lineup.

Qualcomm was Apple's sole supplier for iPhone modems from the period between 2011 and 2016, with that exclusivity ending in 2016 with the launch of the iPhone 7.

With the iPhone 7, Apple split modem orders between Qualcomm and Intel and then later phased Qualcomm out all together. Apple's most recent iPhones use modems exclusively from Intel, but today's testimony suggests Apple is working on diversifying its modem supply.

According to Blevins, during the period when Apple used only Qualcomm chips, Apple had wanted to use chips from other suppliers as well but signed an exclusivity agreement with Qualcomm because Qualcomm offered deep rebates on patent licenses to discourage Apple from diversifying.

In 2013, for example, Apple ended a plan to have Intel supply modems for the iPad mini 2 because Apple would lose Qualcomm rebates by using Intel's chips. This, said Blevins, made Intel's products "economically unattractive."

After Apple finally swapped over to multiple modem suppliers in 2016 and 2017, its legal woes with Qualcomm affected the relationship between the two companies "in a very profound and negative manner," which led to Apple using Intel chips exclusively.

Apple never wanted Intel as a sole supplier, however, and has always wanted to work with multiple companies.
"The entire concept of Project Antique was to find a second supplier. No offense to [Intel] but we don't want to be single supplier with them. We wanted both Qualcomm and [Intel] in the mix," Blevins said.
While Blevins mentioned 5G modem suppliers, he did not conclusively say whether or not Apple had decided on a 5G modem supplier nor whether a 5G modem is planned for the 2019 iPhone lineup.

Rumors have suggested that Apple does not plan to introduce support for 5G in its iPhone lineup in 2019, with the company planning to hold off on 5G technology until at least 2020.

Related Roundup: 2019 iPhones


Top Rated Comments

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18 weeks ago

So the real issue is that Apple wants a the cheap prices from Qualcomm and wants the diversification outside of Qualcomm.
They want to have their cake and eat it also.

No, the whole issue is Apple doesn't want to pay a license fee based on the whole price of their phone, vs paying a straight fee based on the modem by itself.
Rating: 11 Votes
18 weeks ago
I think they'll skip 2019 and surprise! 2020 – new iPhone with new price range $1999 - $2999 ;)
Rating: 10 Votes
18 weeks ago

I don’t think apple will increase prices this year not with how much crap they have got in recent weeks.


They actually need to decrease prices and by a sizable amount.
Rating: 7 Votes
18 weeks ago
The interesting tidbits that are outed by court proceedings, that gives us a small glimpse as to the inner workings of a secretive company.
Rating: 7 Votes
18 weeks ago
Partnering with Samsung is proof that Apple will use you when convenient then throw you under the bus when no longer needed. They have a history of doing that to their suppliers.
Rating: 6 Votes
18 weeks ago
So the real issue is that Apple wants a the cheap prices from Qualcomm and wants the diversification outside of Qualcomm.
They want to have their cake and eat it also.
Rating: 6 Votes
18 weeks ago

Um no. A lot of Apple components to final assembly have a second vendor. Everything from iPad to iPhone. Diversified prevents supply chain problems, and of course being held hostage like with Qualcomm.

Most doubt that Intel and Apple will ever have a spat but it’s not out of the conversation there is enough mumbling that Apple is considering making their own modems.


This narrative is false. Apple had choice of chip suppliers, notably Intel whose inferior wireless modem was used in older / current iPhone models, but instead demanded a huge monetary incentive from Qualcomm for Apple's order. Qualcomm acquiesced to Apple's demand. Then, unhappy that Qualcomm's incentive wasn't still enough, Apple went around lying about their rebate for exclusivity deal as Qualcomm illegally locking-in their customers. This is not just an aggressive business negotiation tactic, but an outright intentional misrepresentation.

Your second argument is also flawed. in cutting technologies like mobile OLED display (Samsung), durable glass (Corning), and custom foundry (TSMC), the market situation doesn't allow buyers from choosing a secondary supplier. Apple's narrative that Qualcomm's rebates for exclusivity prevented Apple from using another supplier is pure baloney.
Rating: 4 Votes
18 weeks ago
MediaTek? Really? Everything they make is garbage.
Rating: 4 Votes
18 weeks ago

Didn’t they say somewhere the contract expired?


Well, several things. First off, Apple has never bought a Qualcomm license. If they did, they'd have to pay much more for the patents. Instead, they cleverly let the various factories use their own licenses to pay only on the price that they charge Apple for a boxed iPhone. E.g. $240 for a $700 retail phone.

That's why the royalties mentioned in articles were at one time only about 3.25% of $240 = ~$7.80 per phone. Apple was not paying royalties based on the huge extra profit that they take from their own customers.

As for the rebate contract, it was in return for Apple exclusively using Qualcomm chips. Apple didn't have to sign of course, but their greed overrode their common sense. No different than the way that GTAT agreed to exclusivity with Apple and later regretted it. But regret is not a legal reason to stop paying, and it's not a reason to claim that they "couldn't buy from other modem makers".

Apple stopped honoring it after Qualcomm withheld rebates because they said Apple broke some of the contract provisions.

--

The real reason why Apple had no other modem choice was because most standalone modem makers went out of business when phone makers everywhere started making / using INTEGRATED CPU + MODEM chips. Mediatek, Samsung, Huawei, everyone used an integrated processor set.

Apple is nearly alone using a separate CPU and modem. So it wasn't until Intel got interested, that Apple had a choice (other than say, a standalone Mediatek). And it's a good bet that Apple will leave Intel behind as well, once they hire away enough people to make their own integrated device.

Honestly, it's really hard to get worked up about two highly profitable companies each wanting to make more profit. But in the end, Apple stashing away more billions does nothing for us. OTOH, Qualcomm making more gives the whole world faster and better data technology.
Rating: 4 Votes
18 weeks ago
Stay away from 5G this year Apple - the tech won't be baked, just like it wasn't for those 1st year 4g phones.
Rating: 4 Votes

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