Apple Abandoning Home-Grown Modems?

By Patrick Moorhead - December 5, 2023

The Six Five team discusses Apple Abandoning Home-Grown Modems.

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Transcript:

Patrick Moorhead: Apple abandoning homegrown modems. Wow. Apple bought Intel’s modem group in 2019 and I was very clear on the challenges. I didn’t say Apple couldn’t do it, but I talked about the challenges of moving forward because you see, when you’re creating a modem, you have to actually do research and Apple hasn’t really been prepared to do that with other people. And modems have to connect to other modems and they have to support 4G, 3G, 2G, 1G, Edge, and they need to work together nicely.

So the matrix of getting it right is a challenge. And then it has to be low power and not just the modem, but the modem and the RF solution. Now Apple has some incredible RF partners out there like Skyworks and also Qualcomm is part of the RF stack, but what it does is another hurdle that they need to go and cross. And the final challenge is integrating a modem onto the SOC. Now you don’t integrate the RF, you integrate the modem. So one of the latest rumors is that Apple is abandoning its homegrown modems. I wouldn’t be surprised if this is the case. I didn’t do the research on this or start this rumor, but we have seen some changes on LinkedIn. We have heard of some changes in conversations with supply chain partners. And quite frankly, Qualcomm is so far ahead with all the features and I know that Apple is likely not. And because you have to work with other people, it puts Apple at a distinct disadvantage. And that’s it.

Daniel Newman: Yeah. This is a big moment though. There’s been a couple of really decent wins for Qualcomm. It’s been the multi-year, multi-year, multi-year extension of this deal. Remember the investor day in New York? We were sitting there and they were starting to actually really present the phase out plan of Apple and how they were going to be able to continue to derive shareholder value, but without Apple. It was pretty compelling and now it’s interesting ’cause if this is true, and again, this is a rumor right now, but if this rumor’s true and there’s reasons to believe it could be. Look, this constant delay and Apple’s got its own demons to fight right now. It’s-

Patrick Moorhead: Yes.

Daniel Newman: It’s innovation, it’s competitiveness, it’s growth, it’s margin. It’s been surpassed now by a couple of different companies as the top of the heap. Its investability looks less indulging. And so right now, do they want to fight this battle? Pat, I think I heard you say this the other day, but every smart company licenses IP from other companies in the process of building products. Of course, if you can go fully vertical and Apple’s done so in some ways it’s been successful, but overall, Pat, I’ll leave it here. I think the rumor has merit, although I can’t confirm it and I actually think to some extent Apple might sleep better at night if they can just get out of their own way here. This has just been a massive failure from the beginning, as I tweeted, and it will continue to be based upon the trajectory that we’ve seen with their first few efforts to get into this space.

Patrick Moorhead
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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.