Intel announces that it will leave 5G phone modems just hours after Apple and Qualcomm

Intel will no longer work on 5G chips for phones, leaving Apple to a single supplier for its iPhones, Qualcomm – the same company fight in court until tuesday noon.

Intel announced Tuesday that it was ceasing to work on modems for 5G, the next generation of wireless technology meant to overload your mobile connection. It worked on a processor for Apple, the chip should be in iPhones in 2020. Lately, there have been concerns that the chip is not ready before the release of iPhones in 2021.

"The company will continue to meet existing customer commitments for its existing 4G smartphone modem product line, but does not plan to launch 5G modem products in the smartphone space, including those originally planned for 2020 ", said Intel in a press release. His only client in the modems is Apple.

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The announcement follows news from the previous Tuesday that Apple and Qualcomm reached a settlement in their fight for license fees. Both parties announced the surprise deal by a joint press release on Tuesday at the same time that the lawyers presented their pleadings in a Southern California court. Apple and its subcontractors had given their statements, and Qualcomm's chief counsel had almost finished his remarks when the audience room buzzed with unexpected news.

In a statement, Intel added that it "will end up evaluating the possibilities offered by 4G and 5G modems on personal computers, devices for the Internet of things and other devices focused on data". He also said that he "will continue to invest in its 5G network infrastructure business".

"We are very excited about the 5G and the" cloudification "of the network, but in the area of ​​smartphone modems, it became obvious that there is no way clear towards profitability and positive returns, "said Intel CEO Bob Swan in a statement. .

Apple v. Qualcomm

The writing was on the wall after Apple and Qualcomm settled down, ending the two-year battle. In January 2017, Apple had accused Qualcomm of anti-competitive practices that resulted in higher token prices, limited competition, and a lack of customer choice. Qualcomm, the world's largest maker of mobile phone chips, said the iPhone would not be possible without its technology and that it deserved to be paid for its innovation.

The settlement marks a big win for Qualcomm, which could have been forced to change all of its business model if Apple had lost it. The agreement is also a win for consumers, who will again have access to Qualcomm's fast modems, including modems already compatible with existing 5G networks.

But with the release of Intel's 5G modems sector, Apple is once again finding itself with only one modems provider, Qualcomm. Apple manufactures its own application processor – the brain of the iPhone – but uses third-party chips for network connectivity. From the iPhone 4S in 2011 to the iPhone 6S and 6S Plus in 2015, the only supplier of these chips was Qualcomm. The following year, Apple began using Intel modems in some models of iPhone 7 and 7 Plus, but still used Qualcomm in versions for Verizon and Sprint.

This trend continued in 2017, but the latest Apple phones, the iPhone XS, XS Max and XR, now only use Intel 4G chips. Apple has blamed Qualcomm, but now that both companies have settled their patent disputes, Qualcomm will again provide chips to Apple.

For Apple, it's probably too late to use Qualcomm chips in its upcoming iPhones later this year. But it is thought that iPhones in 2020 will have Qualcomm's 5G modems. It is expected that all major Android flagship phones by the end of this year will be equipped with 5G.

An Intel spokesman declined to say whether Intel planned to withdraw before the settlement or because of the new agreement between Apple and Qualcomm.

The investors seemed to approve Intel's decision. The chip maker's shares surged nearly 4% to $ 58.97 after trading.

"Without Apple, the Intel phone modems business does not have many options," said Charles King, an analyst at Pund-IT. "The settlement and licensing agreement left Intel with no clear solution for handsets, and the company is really better able to focus its energies and investments on 5G infrastructure solutions and data centers. "

Originally published at 16:39. PT
Updated at 17:09 PT: Add Apple details v. Qualcomm and other background elements.
Updated at 17:23 PT: Add an analyst comment.
Updated at 17:32 PT: Addition of an analyst commentary