Just as the Trump Administration ups its battle against Huawei Technologies Inc., Apple Inc. (AAPL) is stepping up its efforts for the next iPhone. The Cupertino, Calif.-based company will release three new phones next year, with 5G support for two of them, according to a note from widely-followed and reliable Apple analyst Ming-Chi Kuo reported on by CNBC.
Apple Analyst Predicts Apple Lineup and Strategy
In a note on Monday, TF International Securities analyst Ming Chi Kuo said that Apple will release three distinct iPhone models next year with 6.7-inch, 6.1-inch, and 5.4-inch screens. These models are slated to have OLED screens, like the iPhone XS Max and iPhone XS, as opposed to the more affordable iPhone XR, which has an LCD display. The mid-sized phone will not support 5G, said the analyst.
Apple recently settled a longstanding lawsuit with chip maker Qualcomm Inc. (QCOM), which ended in a six-year licensing deal between the two companies. This settlement is important given Qualcomm is able to provide the components necessary for Apple’s first batch of 5G iPhones slated for 2020.
Kuo expects Apple to be ready to integrate its own 5G chips into its phones by 2022 or 2023, writing that “the content of Apple and Qualcomm’s previous settlement includes Qualcomm’s release of partly 5G baseband chip source code to Apple for Apple’s development of [its] own 5G” technologies. He added that Apple doubled down on its 5G initiative following the Trump administration’s ban on Chinese rival Huawei Technologies, which is no longer able to buy software or hardware from American companies.
“Apple’s 5G iPhone strategy became more aggressive after the U.S. export ban on Huawei,” Kuo wrote. “We estimate that 5G iPhones will account for around 60% of total new 2H20 iPhone shipments (vs. consensus’s 20%).”
While the Huawei ban may be positive for Apple, CNBC reports that chip makers like Qualcomm and Intel Corp.’s (INTC) are “quietly” lobbying for Washington to ease the ban on the Asian tech titan, given it buys roughly $11 billion in U.S. components.
Race to 5G Intensifies: Apple to Build Chips In-House
With competing Android phones like Samsung’s Galaxy S10 5G already being marketed as 5G, Apple is under pressure to rush into the next-gen market. That’s even as 5G infrastructure that the phones will rely on has a long way to go.
Given the intensity of competition in the smartphone space to offer 5G phones, it is now reported that Apple is undertaking an initiative to develop chips for its new phones in house. If Apple does begin to make its own 5G modems for its inevitable new iPhones, it would present a huge disruption to its supply chain.
Changes within the company support this hypothesis about Apple’s in-house chip initiative, as outlined by Computerworld. Recently, the iPhone maker’s 5G chip development team joined its hardware technology group. This occurred around the same time that the previous 5G head at Apple left the company. Apple then poached Intel's 5G development leader Umashankar Thyagarajan, marking a major move considering that before the Qualcomm deal, Apple was reportedly in talks to buy Intel’s modem business.
Shortly after the news revealed the Apple Qualcomm deal, Intel said it was exiting the 5G modem business. Meanwhile, Apple has more than 2,000 engineers looking at 5G modem development, per Fast Company.
While analysts expect Apple to make its own modems in the long-term, the tech titan’s six year Qualcomm deal gives it a good deal of time to develop its own chips and begin to navigate the complex world of 5G intellectual property patents.
Moving forward, some expect Apple to continue to steal away engineers from Intel. If anything is for certain it's that the push for 5G infrastructure will continue to hype up next-gen networks and devices, and should remain a top priority for smartphone companies in the coming period.