Once upon a time (2018), Intel and Apple were the best of friends contractually obligated to say nice things about each other from public stages as part of a deal in which Apple would use Intel’s 5G modem in its future products and Intel would have a major customer with which to justify aggressively investing in 5G modems. The deal fell through when Intel failed to meet certain deadlines or achieve Apple’s target metrics. The details are uncertain. What we do know is that Apple paid Qualcomm $4.5B to settle the case and obtain a license for Qualcomm’s 5G modem technology, and Intel announced it was shutting its modem business and RD down as a result.
Now, there’s a rumor that Apple might actually want to buy Intel’s modem division in the first place, relieving Chipzilla of the German design unit it acquired when it bought Infineon. Intel, meanwhile, is potentially looking for a buyer. The company has been quoted as saying: “We have hired outside advisors to help us assess strategic options for our wireless 5G phone business. We have created value both in our portfolio of wireless modem products and in our intellectual property.” Some Infineon engineers and executives are now Apple employees, which may make the entire deal more likely.
Did Qualcomm Kill Intel’s Mobile Efforts?
A few years ago, I wrote a pair of articles on Intel’s lack of success in the mobile market. I stand by both — I think they hold up well today as discussions of some of the missteps Intel made. But if I were writing the series again today, I might well include a Part III — the impact of Qualcomm’s business practices on Intel’s ability to find a market for its products.
Ars Technica published an excellent deep dive into the Qualcomm anti-trust finding last month that’s well worth a read. The more than 200 page decision spells out a number of actions Qualcomm took that Judge Lucy Koh felt were clear violations of antitrust law. Qualcomm structured contracts in ways that made it impossible for other chipmakers to compete against it and customers who refused to go along with these agreements could be subject to a crippling loss of access to product.
There are some distinct similarities between what Intel allegedly did to AMD in the early 2000s and what Qualcomm did to its own customers over the last two decades, including rebate practices that required customers to sell either 85 percent or 100 percent Qualcomm hardware to receive them. This does not make such practices right, and it’s a matter of historical fact that Qualcomm dominated the LTE market, particularly in the early years of the standard.
Apple was reportedly working on its own 5G modem even before it split from Intel, so the idea that the company might buy Intel’s modem division and make it the core of its own networking efforts would scarcely be a surprise. Doing so would mean Apple finally had all the building blocks necessary to build a complete, in-house processor (less whatever I/O blocks it might still license from various firms). With iPhone sales falling, Apple owning its own CPU, GPU, and modem would be a way for the company to capture a bit more profit on every phone, helping to keep margins and profits higher when sales are stagnant or declining.
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