Intel this afternoon announced plans to exit the 5G smartphone modem business to instead focus on opportunities for 4G and 5G modems in PCs, internet of things devices, and other data-centric devices.
The announcement comes just hours after Apple and Qualcomm reached a settlement and agreed to drop all litigation against one another. Intel said that it will continue current customer commitments for existing 4G smartphone modems, but it will not launch 5G modems in the smartphone space.
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In a statement, Intel CEO Bob Swan said that there is "no clear path to profitability and positive returns" in the smartphone modem business.
"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. We are assessing our options to realize the value we have created, including the opportunities in a wide variety of data-centric platforms and devices in a 5G world."
Rumors earlier today suggested Apple would use Qualcomm's 5G chips in its 2020 iPhones, and now it's apparent that the Cupertino company has no choice with Intel opting to pull out of the chip business all together.
Following Apple's legal battle with Qualcomm, Intel was the sole supplier of modem chips for the 2018 iPhone lineup and planned to provide 5G chips for Apple in 2020.
Intel had been working on the XMM 8160 5G chip, which was going to be used in the 2020 iPhone lineup. Rumors earlier this month indicated the relationship between Apple and Intel had grown tense as Intel began missing developmental deadlines on the 5G chip, leading Apple to lose confidence in Intel's ability to provide the chips in time for a 2020 5G iPhone launch.
Apple appears to have been left with no choice but to settle with Qualcomm in order to be able to roll out a 5G iPhone in 2020 as planned. Apple's settlement with Qualcomm included a six-year licensing agreement and a multiyear chipset supply agreement.
Apple is said to be sticking with Intel chips in 2019 because it's too late for the company to adopt Qualcomm's chips, but in 2020, Qualcomm may be Apple's only chip supplier once again.
To reduce its reliance on Qualcomm, Apple is working on its own chip technology, but Apple's own modem chips aren't expected to be ready until 2021.
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The Apple apologists will explain how this was in the Apple master plans and how Qualcomm capitulated to end the lawsuit. This proves exactly the opposite. Apple paid up as they should have.