June 5, 2017
Apple has been locked in a bitter dispute with Qualcomm, a major chip manufacturer that has historically supplied the wireless modems for the iPhone. According to a new report, Apple's legal dispute with Qualcomm is going to have an effect on iPhone 8 components, and Apple might have to substitute some Qualcomm chips with Intel components. Given the inferior quality of the Intel chips in last year's iPhone 7, that's not good news.
According to a Digitimes report, Apple will shift supply of iPhone baseband modems away from Qualcomm and toward Intel, starting this year. The report says that 50% of the iPhone 8 modems could be supplied by Intel, with that number rising to 70% for the 2018 iPhone lineup.
Intel's modems have historically been cheaper but worse-performing than Qualcomm's solution. A worse modem means less power efficiency but also a worse cell signal with lower speeds - all important things for Apple, especially considering new LTE technologies are being deployed this year, and wireless speed is set to take on a new level of importance. Qualcomm generally supplies the modem for every Android flagship worth talking about, and the iPhone's reputation is all about reliability and speed. Apple could be forced to make a bad choice here: make an unpleasant legal settlement with Qualcomm, which would likely eat into Apple's profit margins; or accept an inferior component in nearly half of its brand-new iPhone range.
Apple's dispute with Qualcomm is related to the licensing fees Qualcomm charges for its patents. Qualcomm's intellectual property is used inside every single iPhone - which Apple acknowledges - but Apple contends that Qualcomm charges unreasonably high patent fees. Apple has sued Qualcomm over the issue in the past, and even instructed its manufacturing partners like Foxconn to stop royalty payments to Qualcomm. The chip manufacturer has countersued in the Southern District of California; if the case there fails, Qualcomm could even take the issue to the U.S. International Trade Commission, and seek a ruling banning the import of iPhones into the US.
Nothing's yet indicated that Qualcomm is prepared to go that far. But the rumors about Apple shifting as much of supply as possible away from Qualcomm is telling. Apple's bunkering down and preparing for a war with a vitally important component supplier; let's just hope iPhone customers don't get caught in the crossfire.
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