One of the most defining moments for Apple in the past 15 years was its decision to begin designing its own chipsets and processors. Apple had previously outsourced much of the design of the chips used in its devices, prior to the introduction of the iPhone and its own A-series chip that was used in the first generation iPhone. Since then, Apple has become increasingly less dependent on having to outsource the various systems-on-chip (SoC) and systems-in-package (SiP), housed in its smartphones, tablets, laptops and wearables.
Apple has set its sights on bringing a new component in-house: the smartphone modems. On July 25th, Apple announced it would be buying “the majority” of Intel’s smartphone modem business for $1 billion. The purchase includes IP and equipment from Intel, along with 2,200 Intel employees who will be joining Apple. So why did Apple buy Intel’s smartphone modem business? In short, it’s the impending arrival of widespread 5G connectivity and the rise of its wearables business.
Rene Ritchie brought expert analyst and founder of Tech.Pinions, Ben Bajarin, on his podcast, Vector, to discuss the acquisition and shed a light on Apple’s motivation. Here’s a key point that Ben made (paraphrasing a bit):
“There’s no doubt that Apple wants to make its own modems. I think that’s been clear not just from reports, but the hiring. Doing baseband has been a high priority, but it’s also been a struggle and again it’s one of those things that they would have needed a license from somebody else whether it was Qualcomm or Intel… they needed that IP because the patent portfolio for modems is just so well covered that you need to get access to that portfolio if you’re going to get into that business.
It makes a lot of sense if you think about where they’re going, with computers that we wear on our wrists, on our faces, in our ears… all of those things will need modems. For them to control the design, miniaturize it and put them in small devices like earbuds, smaller watches or glasses, they need to control the modem and all the silicon bits to design something that small.”
One of the big takeaways from listening to Ben speak about this acquisition is that as Apple continues to bring more of the component design in-house, it allows them to consolidate components into single SoC’s or SiPs, which is really important for energy efficiency and better performance. When we’re viewing this acquisition through the lens of the wearable offerings, the name of the game across the next few years will be to find ways to increase things like energy efficiency and performance, for devices that are super small.
When asked about Apple’s timeline of the implementation of its own modems, here’s what Ben had to say:
“I think for 5G, it’s going to take some time. If we’re thinking about a device that needs a 5G modem, I think we’ll see Apple use Qualcomm’s modems for the foreseeable future. But remember, Apple is already using this technology, they have all the expertise to make an LTE modem with Intel. I could see them using their own LTE-modem within an iPad or even an Apple Watch in the next year or two.”
So, we should see Apple start in this space by designing its own LTE-based modems and relying on Qualcomm in the near-term for anything that requires 5G. In 3-5 years, however, as 5G becomes more ubiquitous and Apple’s wearables are more robust & power-hungry, we might see Apple’s modem ambitions start to migrate toward 5G modems, which will likely be designed and integrated with the other components on the SoC’s and SiP’s Apple designs and develops, allowing for more creative uses and efficient battery life.
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