Apple executive admits that it has started building its own 5G modem chips

According to Bloomberg, Apple has started working on its own in-house cellular modems. You might remember that last year Apple was pretty desperate because of legal battles it had against Qualcomm. Unable to work out a deal with the chip designer, Apple turned to Intel and agreed that it would use the latter’s modem chip on the first 5G iPhone models. But truthfully, behind the scenes Apple was not confident in Intel’s ability to deliver such a chip in time. As a result, Apple decided to drop all legal action against Qualcomm. Apple allegedly paid the San Diego based firm $4.5 billion for a six-year licensing agreement with a two-year option and received a multiyear chipset supply agreement.

Even though Apple no longer faces the pressure to find a source for 5G chip modems thanks to the deal with Qualcomm, it still wants to develop its own. This way, Apple won’t be at the mercy of another company as it seeks to lock in supplies. Apple’s Johny Srouji, the company’s senior vice president of hardware technologies, met with employees at a townhall meeting where the executive passed along the word that Apple had started building its own cellular modem for future devices. The new modems would replace Qualcomm components. As a result, shares of Qualcomm declined 6.3% in extended stock market trading on Thursday. 11% of Qualcomm’s revenues come from Apple while 7% of Intel’s revenue rely on the iPhone manufacturer..

Talking about producing its own modems, Srouji said, “This year, we kicked off the development of our first internal cellular modem which will enable another key strategic transition. 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.” Toward the end of last year, Apple spent $1 billion to buy Intel’s smartphone modem chip business.

The 5G iPhone 12 series use Qualcomm’s X55 5G modems. Before that, Intel’s modems were employed on earlier iPhone models. It isn’t clear when Apple’s own modems will be available, but Apple has been luring away Qualcomm engineers for years.

The first iPhone model to ship with Apple’s own chipset inside was 2010’s iPhone 4 which featured Apple’s own A4  processor. The A4 not only powered the iPhone 4, it also powered the OG iPad tablet. Apple’s devices now include custom chips made by the company for its cameras, Artificial Intelligence, and to collect motion data.