KGI: Intel might be exclusive modem supplier for 2018 iPhone lineup, Qualcomm iced out
According to noted analyst Ming-Chi Kuo, Intel's baseband chips are expected to power communications across Apple's entire 2018 iPhone lineup, a supplier switch that, if true, would deal a major blow to market leader Qualcomm.
In a note to investors seen by AppleInsider, Kuo revised earlier predictions regarding 2018 iPhone component share, saying Intel could be Apple sole supplier of cellular modems for iPhone this year.
Previously, the analyst believed Qualcomm would take a 70 percent share of baseband chip orders, with the remainder going to Intel.
Beyond advancements to Intel's chip technology, which supposedly meet Apple's performance standards, the firm's baseband solution supports CDMA2000 and dual SIM and dual standby (DSDS), making it ideal for a next-generation handset. In addition, Intel is offering more competitive component pricing as a market upstart.
Interestingly, Intel's modem performance has in the past been a topic of contentious debate. Qualcomm itself got in on the action last year, alleging in court filings that Apple intentionally slowed Qualcomm baseband chips to reach parity with slower Intel silicon. Whether the disparity in performance has been rectified is at this point unclear.
Kuo also points to Apple's ongoing legal battle with Qualcomm, saying an iPhone exclusivity pact could force the chipmaker into a diminished bargaining position. By allocating orders for 2018 iPhones — and perhaps future devices — to Intel, Apple would apply pressure on the already embattled Qualcomm, which currently faces decreased licensing revenue as a result of Apple's decision to withhold royalty payments until the broad-reaching litigation is settled.
Whether Qualcomm will fall back into the Apple fold remains to be seen, Kuo says. There is a possibility that Intel might not deliver on performance promises, for example, and Apple has traditionally sought diversification in its supply chain.
To make up for the potential order shortfall, Kuo believes Qualcomm will aggressively seek out sales from Chinese smartphone manufacturers.
Qualcomm is already hurting from a protracted legal barrage that began when Apple leveled a nearly $1 billion complaint alleging the firm participates in anticompetitive practices and charges excessive royalties. The chipmaker is also the subject of international trade probes and was recently slapped with a $1.2 billion fine from the EU for making illegal payments to Apple in a bid to secure component orders.
In an earnings report last week, Qualcomm recorded a 96 percent drop in operating profit due in large part to Apple's payment stoppage, a decision that trickled down to partner suppliers.
Kuo is not the first to spin a Qualcomm-free iPhone narrative. Last year, reports claimed Apple was designing iPhones and iPads without Qualcomm modems after the chipmaker denied access to key evaluation software. Another report said Apple and Intel engineers were tightly engaged on 5G modem designs set to debut in a future iPhone iteration.