Qualcomm Says Apple Dropping Its iPhone Modems

Amid ongoing disputes, Apple Inc. (AAPL) and Qualcomm Inc. (QCOM) have officially broken up.

During an earnings call Wednesday, Qualcomm Chief Financial Officer George Davis said, "We believe Apple intends to solely use our competitor's modems rather than our modems in its next iPhone release," according to CNET. While Qualcomm did not specifically mention any specific names for the modem supplying company for Apple’s next iPhone, it is widely understood to be Intel Inc. (INTC). (See also: Qualcomm Faces Earnings Volatility, Divorce From Apple.)

Qualcomm has long been a major supplier of 4G chipsets for smartphones to leading device makers like Apple. However, the partners have been at loggerheads since the start of 2017 owing to patent disputes.

End of the Qualcomm-Apple Partnership?

Qualcomm is the largest provider of mobile chips: It built the technology by which phones get connected to cellular networks. Since company has patents related to 3G and 4G technology, all device makers are obliged to pay it a licensing fee even if they don't use Qualcomm chips. The legal spat includes Apple’s use of Qualcomm technology and the amount of royalty payment the chipmaker charged Apple for use of its components and patents.

While Qualcomm used to be the sole supplier of the modems to all Apple phones, the iPhone maker now uses 4G chips manufactured by Intel in around 50% of its devices, in particular those on the AT&T and T-Mobile networks.  (See also: Qualcomm's Feud With Apple Now Ropes in Intel.)

By going with Intel, Apple has diversified its partner base and by eliminating its dependency on one chip supplier. But that has resulted in restraining network speed for end users, says Qualcomm. Speed tests show Qualcomm-powered smartphones having faster network speeds than the ones running on Intel processors, according to Qualcomm

A Need for Speed?

Ryan Shrout, principal research analyst at Shrout Research tweeted, “Makes this simpler for debates moving forward. "Qualcomm will be the best performing 4G and 5G modem for a LONG TIME so now its time for Android makers, and QC, and cellular carriers, to start making noise on this.”

In switching from Qualcomm to Intel, Apple may be creating a new dependency on a single supplier, which may result in fulfillment delays and longer waiting periods for iPhone buyers.

However, it is not the end of the road for Qualcomm. Cristiano Amon, the head of Qualcomm's chip business, noted that it doesn't mean Qualcomm has lost Apple's business forever. He expressed hope for continued business with the iPhone maker. "If the opportunity presents itself, I think we will be a supplier of Apple," said Amon. (See also: Qualcomm at Risk From Apple, Samsung, Huawei Chips.)

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