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Back in 2016, wireless giant Qualcomm (NASDAQ: QCOM) lost its status as the sole source of the cellular modems inside Apple's (NASDAQ: AAPL) iPhones, when giant chip Intel (NASDAQ: INTC) became a second source modem for the iPhone 7-series of devices.
Qualcomm remained an iPhone modem for the future generation of iPhones. However, it was designed for this year 's crop of iPhones, made possible by Intel' s added support for the standard CDMA wireless – a standard that some carriers still rely on – its latest cellular modem, known as the XMM 7560.
Source image: Intel.
Back in February, Ming-Chi Kuo badyst, at the time reporting that 2018 iPhones, indicated – by way of 9to5Mac – That Qualcomm might eventually be read to the iPhone modem supply chain.
here's 9to5Mac's summary of Kuo's comments:
He is now claiming that Qualcomm will be excluded from 2018 iPhones altogether. However, KGI does not rule out Qualcomm returning to the supply chain, as in the patent lawsuit settlement.
KGI says there's also a risk that Intel can not be ready for 5G networking as soon as Qualcomm, which may also force Apple's hand.
Given recent developments, I think the odds that Qualcomm will win back iPhone modem orders anytime soon do not look good. Here's why.
Intel's performance seems to be improving
Qualcomm is the market leader in terms of cellular modems, but Intel's performance seems to be improving. According to PC Magazine's testing, "the iPhone XS – powered by Intel's XMM 7560 modem – is a huge step up from the iPhone when it comes to LTE download speeds, according to exclusive new data from Cellular Insights and Ookla Speedtest."
The site did not admit that it "does not quite match the Qualcomm X20 modem used in the Samsung (NASDAQOTH: SSNLF) Galaxy Note 9. "However, the performance difference seems to be smaller than it was with prior generations of Intel modems, signaling that Intel has improved the competitiveness of its modem technology with the XMM 7560.
As far as the 5G risk that Kuo highlighted back in February, it's worth noting that Intel has announced that its XMM 8160 5G modem, the modem that Fast Company reports will power Apple's 2020 iPhones, is on track in the second half of 2019 and will pop up in devices during the first half of 2020.
Fast Company Intel Intel XMM 8060 5G chip – a chip that Intel indicates is intended for use as a "development platform," it is not only that it is more likely to be "heat dissipation issues."
With that in mind, Fast Company "Apple's current issues with Intel are not serious enough to cause Apple to reopen conversations with Qualcomm about supplying 5G modems."
Apple is a marathon, not a sprint, so Intel can not just get the XMM 8160 out and declare victory for all time. The company needs to keep cranking out modems that meet Apple's requirements.
However, given that Intel's modem execution is likely to be an upward trajectory, and considering the legal dispute that is currently ongoing between Apple and Qualcomm, the chances are not good that Apple's cellular modem will soon be back.
Ashraf Ebada owns shares of Qualcomm. The Motley Fool owns shares of and recommends Apple. The Motley Fool owns shares of Qualcomm and has the following options: long January 2020 $ 150 calls on Apple and short January 2020 $ 155 calls on Apple. The Motley Fool has a disclosure policy.
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