After two years of escalating litigations, a settlement was announced between Apple and Qualcomm, the mobile chip manufacturer giant, last week. It also brings Qualcomm back as Apple’s supplier once again for baseband modems which is one if the most important internal parts of the iPhone.
This was not the case in 2018 when intel was the primary 4G supplier for Apple’s iPhone, which Intel will no longer be. Even though Qualcomm will be providing 5G modems for Apples 2020 iPhones, Apple does prefer to have two sources for its modems and is considering Samsung as well, which already provides many other components for Apple’s products.
Ming-Chi Kuo, who is a respected TF International Securities analyst, reports that
for Apples 2020 product cycle, Qualcommand Samsung will be Apple’s 5G modem suppliers, although he reports that Apple will most likely use Samsung for select markets.
Kuo wrote in MacRumors that “We expect Apple will likely adopt 5G baseband chips made by Qualcomm (focus on mmWave markets) and Samsung (focus on Sub-6GHz markets) for lowering supply risk, reducing costs and having better bargaining power.”
Even though Apple at first had wanted to have a dual-source for its modems in 2018 with Intel and Qualcomm as Jeff Williams, Apple’s Chief Operations Officer, testified in court in January, Qualcomm refused to do so due to the ongoing legal battle between them and Apple.
But now that things are settled, Qualcomm is in the line-up to supply 5G modems for Apple and Kuo predicts that Apple will sell 70 million flagship iPhones in the second half of 2020 while the total for iPhone volume in sales for the year are expected to reach an estimate of 195 to 200 million.
Although Apple stopped reporting its unit sales for 2018, it is estimated that it may have sold around 205 million iPhones.
According to the Washington Post, while Apple sought to undermine the quality and validity or value of Qualcomm’s chip modems technology in public during the legal battle in court, on the inside of Apple’s headquarters, Qualcomm’s chips were hailed as ‘the best.’It was the strategy Apple used to reduce the royalty burden which it considered as ‘extortionlevel’ by Qualcomm when it filed its initial complaint in 2017.
But now that the legal battles are over, Apple has received access to ‘the best’ in the industry in 5G modems from Qualcomm for this next year as well as bringing on board Samsung as a secondary supplier. This puts Apple in a good position to allay supply-chain risk and Apple’s sole reliance on Qualcomm which is a very good thing for the company.