Apple has begun developing its own cellular modem for future smartphones, its top chief manager told employees on Thursday. It’s a development that will replace Qualcomm Inc. components.
According to individuals familiar with the remarks, Johny Srouji, Apple’s senior vice president of hardware technology, made the announcement in a town hall meeting with Apple employees. In extended trade, Qualcomm shares fell as much as 6.3 percent.
“This year, we kicked off the development of our first internal cellular modem which will enable another key strategic transition,” he said. “Long-term strategic investments like these are a critical part of enabling our products and making sure we have a rich pipeline of innovative technologies for our future.”
What makes this part different from others?
Among the most important elements of a smartphone is a cellular modem, allowing phone calls and network connection through cellular networks.
Srouji said the $1 billion purchase of Intel’s modem company in 2019 helped Apple grow its own cellular modem by creating a team of hardware and software engineers. He said the modem is one of a few wireless chips developed by the company.
The new iPhones with 5G use Qualcomm pieces. Before that for a couple of years, Apple used Intel parts and then acquired the business unit from the chipmaker.
Srouji did not specify when the cellular modem will be able to ship goods, but a six-year licensing pact is included in a 2019 patent agreement between Apple and Qualcomm. Qualcomm charges telecommunications manufacturers licensing fees based on the wireless patents it holds, regardless of whether or not they use its chips.
Srouji also highlighted Apple’s other work on chips in the meeting with employees, including the updated M1 processors in the current MacBook Air, MacBook Pro and Mac mini. Apple operates on a “family” of Mac chips, said Srouji. Bloomberg News announced earlier this week that Apple is planning updates that are intended to improve Intel’s fastest computer chips.
Why the move?
For years, the Cupertino-based tech giant has employed Qualcomm engineers to help it develop the modem, and has offices based on the effort in San Diego, at its headquarters in Cupertino, California, and in Europe.
At the cost of Qualcomm, Intel and others the move expands Apple’s drive toward greater dependence on its own components. According to data collected by Bloomberg, Qualcomm gets about 11 percent of its revenue from Apple, while Intel gets about 7 percent of revenues from the iPhone manufacturer.
With the A4 main processor in its previous devices, Apple began shipping its own chips in 2010. Apple has also extended this work to custom camera processors, chips to manage tasks of artificial intelligence and motion data collection, along with chips for Apple Watches, Apple TVs and headphones.
Some of the tech giant’s most innovative chip designs to date are the Mac processors. The production of cellular modems is also demanding.