Qualcomm predicts it will supply only 20% of modems for 2023 iPhone

Qualcomm will only provide a fifth of the modem chips for the 2023 iPhone range, the company has predicted, with Apple thought to be using other means to acquire 80% of the modems it needs.

Qualcomm and Apple have had a rocky relationship, but with Apple actively investing in creating its own modems, it seems Qualcomm knows its days are numbered as a major modem supplier for the iPhone. In an investor event, the chip maker revealed that it thought Apple will only supply 20% of the modems it needs for the smartphone in 2023 from Qualcomm.

The chip maker didn't specify where the remaining 80% of modems would come from, be it from Apple's own production or from other suppliers, reports Reuters.

Apple and Qualcomm reached a modem licensing deal in April 2019, ending a high-stakes patent licensing trial in the process. As part of that deal, there was also a multi-year chipset supply agreement and a six-year license agreement.

Within months, in July 2019, Apple signed a billion-dollar deal to acquire the majority of Intel's cellular modem patents, IP, and key personnel, effectively buying the remains of Intel's modem business. With the assets, Apple is thought to be working on its own design of 5G baseband chips, which could be incorporated into future iPhone models by 2023.

The reduced supply to Apple won't be damaging to Qualcomm, the company believes. By the end of fiscal 2024, Qualcomm CFO Akash Palkhiwala expects Apple to make up a "low single-digit" percentage of its revenue.

With the exception of Apple sales, Qualcomm thinks revenue growth in smartphones will grow faster than the market at large, due to partnerships with vendors such as Xiaomi, Oppo, and Vivo. "We're no longer defined by a single end market and single customer relationship," said CEO Cristiano Amon.

That's not to say that Apple won't use Qualcomm as a supplier, with Amon adding that there's always a chance of supplying radio-frequency front-end chips to the iPhone maker in the future. However, those potential sales were not included in Qualcomm's forecasts.

Qualcomm is also not defined just by smartphones, as $10 billion of its $27 billion revenue for the year stemmed from other markets. Qualcomm has also signaled an intention to take on Apple Silicon in PC system-on-chips, with its first chips potentially arriving at vendors within nine months.

9 Comments

blastdoor 15 Years · 3594 comments

About 3 years ago

For the other 80%, I wonder if Apple will need to pay Qualcomm some patent royalties.

rmoo 3 Years · 30 comments

About 3 years ago

blastdoor said:

For the other 80%, I wonder if Apple will need to pay Qualcomm some patent royalties.

No, they won't. The royalties are for 3G, and AT&T, Verizon and T-Mobile are trying their level best to get the feds to finally allow them to shut their 3G networks down. Various medical and emergency alert entities that still use 3G - and some 2G - tech have thus far successfully petitioned the feds to prevent the mobile telcos from shutting them off, even though the telcos have warned them for like 10 years that the legacy services were going away, and they want to repurpose the spectrums and hardware to increase 5G coverage and begin preparations for 6G (plus the fact that they have longed ceased making money off 2G and 3G and are being forced by the feds to keep providing it at a loss).

Even if the legacy network users are successful in forcing the telcos to keep 3G going, Google finally crossed the line in the sand by shipping the Pixel 6 with a Samsung Exynos modem, not a Qualcomm one. It is the first time a Samsung modem has ever been used in the United States, and it doesn't support the legacy networks. It only supports 4G and 5G. Meaning that neither Google or Samsung is paying Qualcomm royalties. Apple can certainly follow Google's precedent and make their own modems without 3G in 2023. That way, they wouldn't need to pay Qualcomm anything.

rmoo 3 Years · 30 comments

About 3 years ago

lmasanti said:

Qualcomm is saying: “Attention Shareholders: We are going the way of Intel with Apple!”

Intel had record profits in 2020 and is on pace to have record profits again in 2021. 2022 will be even better for them because of the combined benefits of finally producing CPUs that outperform AMD - though at the cost of A LOT of power - with Alder Lake as well as joining Nvidia and AMD in the GPU game. So yes, Intel is fine and Qualcomm is going to be fine also.

There are certain areas where market share does matter, and being a component supplier is one of them. Apple has only 15% of the smartphone market and 35% of the tablet market (with very few iPads having mobile radios to begin with). Qualcomm won't miss much from their $23 billion annual revenue by losing money on the $40 modems that it sells Apple. And no, they don't need to sell very many CPUs for Windows on ARM devices to make it up. Qualcomm's next big bet is on CPUs and platforms for IoT and AI, and if that pays off - though Nvidia, AMD, Intel and Samsung are competitors there - it will more than make up for the lost Apple modem revenue.

It is losing ground in the Android and ChromeOS CPU device market to MediaTek - and potentially Samsung - that threatens Qualcomm. Just as AMD is a much bigger threat to Intel than Apple will ever be because both are going after the same Windows and ChromeOS (for PCs) and Windows and Linux (for servers) market share that is much bigger, MediaTek and Samsung are bigger threats to Qualcomm. MediaTek is now the #1 chipmaker globally - surpassing Qualcomm - and Samsung in addition to stealing Google's business from Qualcomm is going to start replacing Qualcomm SOCs with their own Exynos SOCs in their midrange phones starting in 2022.

blastdoor 15 Years · 3594 comments

About 3 years ago

rmoo said:

blastdoor said:

For the other 80%, I wonder if Apple will need to pay Qualcomm some patent royalties.

No, they won't. The royalties are for 3G, and AT&T, Verizon and T-Mobile are trying their level best to get the feds to finally allow them to shut their 3G networks down. Various medical and emergency alert entities that still use 3G - and some 2G - tech have thus far successfully petitioned the feds to prevent the mobile telcos from shutting them off, even though the telcos have warned them for like 10 years that the legacy services were going away, and they want to repurpose the spectrums and hardware to increase 5G coverage and begin preparations for 6G (plus the fact that they have longed ceased making money off 2G and 3G and are being forced by the feds to keep providing it at a loss).

Even if the legacy network users are successful in forcing the telcos to keep 3G going, Google finally crossed the line in the sand by shipping the Pixel 6 with a Samsung Exynos modem, not a Qualcomm one. It is the first time a Samsung modem has ever been used in the United States, and it doesn't support the legacy networks. It only supports 4G and 5G. Meaning that neither Google or Samsung is paying Qualcomm royalties. Apple can certainly follow Google's precedent and make their own modems without 3G in 2023. That way, they wouldn't need to pay Qualcomm anything.

Not sure of the validity of this source, but it suggests multiple companies have 5G patents, including apple, but apple is pretty far down the list. Samsung is near the top.

https://www.statista.com/statistics/1230594/share-of-5g-patent-families-ownership-by-company/

GG1 7 Years · 483 comments

About 3 years ago

blastdoor said:

For the other 80%, I wonder if Apple will need to pay Qualcomm some patent royalties.

I don't remember reading that QC was going to sue Intel when Intel were developing the 5G modem for Apple, so I suspect that Apple's purchase of Intel (from Infineon/Siemens) had enough IP to insulate Apple from QC.

Or Rmoo's answer is correct.

Either way, I look forward to an Apple 5G modem! What I don't know is if the TSMC process for the A-series chips is compatible with that of a 5G modem, i.e., would separate chips be required (A-series + modem chips) or one combination chip is possible (further reducing iPhone/iPad cost).

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