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2023 iPhone may house Apple-designed 5G modem, analyst claims

76%
9 min read
Comments
  • Analyst Ming-Chi Kuo expects the Apple-designed 5G modem to ship with 2023 iPhone line-up.
  • This custom modem is expected to bring drastic improvements over other competitors.
  • The debut of Apple-designed 5G modem will also most probably end Qualcomm’s partnership with Apple.



According to a new investors note from Apple analyst Ming-Chi Kuo (reliability: 80.95%), iPhones may be equipped with Apple’s own custom-design 5G baseband chip starting as early as 2023.

We predict that the ‌iPhone‌ will adopt Apple's own design 5G baseband chips in 2023 at the earliest. As Android sales in the high-end 5G phone market are sluggish, Qualcomm will be forced to compete for more orders in the low-end market to compensate for Apple's order loss. When the supply constraints improve, MediaTek and Qualcomm will have less bargaining power over brands, resulting in significantly higher competitive pressure in the mid-to low-end market.

In 2019, Apple and Qualcomm settled a legal battle over unfair patent licensing terms, when the two companies went to court in the United States. The iPhone maker was then hoping to launch iPhones with Intel 5G modems, according to various rumors at the time. However, that did not pan out — and the company was forced in a settlement with Qualcomm to give it at least six years of exclusivity with Qualcomm’s modem supply. Intel’s 5G chip development efforts were then quickly terminated, and Apple acquired the engineering group through a $1 billion acquisition. Shortly after, the debut of Qualcomm’s first 5G modem ‘Snapdragon X55’ was seen with the iPhone 12 line. It’s even expected that Qualcomm’s latest ‘Snapdragon X65’ will be seen in the 2022 iPhone line-up. However, in an end-of-year internal meeting, Apple SVP Johny Srouji confirmed to employees that Apple had started work on its first 5G modem in 2020 as the six years of exclusivity provided the company with time to design its own custom modem and baseband. In fact, a 2019 report also indicated that Apple had wanted to be able to ship its modem in some devices as soon as 2022. It was even reported by Bloomberg back in 2020, that Apple has started working on a cellular modem . Additionally, in March, Barclays analysts reported that Apple will include its own custom-designed 5G modem starting with the 2023 iPhone. All this seems to fall in-line with what Kuo's latest expectations from yesterday’s note. He believes that Apple will be in a position to ship its modem in volume for the iPhones in 2023.

This transition from Qualcomm modems to Apple-designed modems is anticipated to provide various advantages. Right now, the 5G modem and Apple SoC are two separate chips. The Apple-designed 5G modem would mean unifying the two chips together. This would help Apple achieve faster speeds, greater power efficiency and improved latency, and so on, compared to Qualcomm and Intel modems. In 2019, Apple purchased the majority of Intel's smartphone modem business. At the time, Apple said that the purchase will "help expedite our development on future products and allow Apple to further differentiate [our products] moving forward." An Apple-designed 5G modem would also mean that Apple may also be able to reduce the per-unit costs as it will no longer have to pay Qualcomm a healthy profit margin for every iPhone sold. Apple’s investment in custom-designed CPUs and GPUs has paid off massively, with the A14/M1 chip enabling Apple’s latest products to lead the industry in phones, tablets, laptops and desktop PCs.

Regardless, it’s still important to note what Kuo has stressed in his investor note that an Apple-designed 5G modem would come in 2023 at the earliest.




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