Following Apple’s last-minute patent licensing settlement with Qualcomm today, Intel has unexpectedly dropped out of the 5G modem-making business for smartphones. The Santa Clara-based chipmaker says it is in the process of assessing its remaining modem-related opportunities for PCs, internet of things devices, and data-focused devices, but it intends to continue making 5G network infrastructure components.
Intel CEO Bob Swan suggested that the company couldn’t compete “in the smartphone modem business,” saying “it has become apparent that there is no clear path to profitability and positive returns.” But he called 5G “a strategic priority” across the company and said Intel is reviewing the options for its wireless products and intellectual property — a signal that it may be looking to sell its portfolio.
As Intel already sells 4G modems, the company says it will continue to provide those products to customers, but it does not intend to produce 5G modems for smartphones. The continuation of its existing 4G modem business will enable companies such as Apple to continue producing existing and scheduled products with Intel chips as they begin to transition to competing products.
Today’s announcement brings an abrupt end to widespread industry speculation regarding Intel’s ability to serve as a supplier of 5G modems for Apple. Less than two weeks ago, Intel rebuffed a report that it was facing new problems in its 5G modem development program, calling into question a single-sourced claim that missed milestones were imperiling its supply prospects with Apple.
At the time, Intel told VentureBeat that it still planned “to support customer device launches in 2020 with its XMM 8160 5G multimode modem.” However, the company’s passive denial mirrored a similar situation in 2018, when it shrugged off a report of troubles with its XMM 8060 modem, only to later drop the project in favor of its now-cancelled sequel.
Intel’s modem-making rival Qualcomm had accused the company of conspiring with Apple to undermine its business, claiming that Apple had shared secret and proprietary Qualcomm information to accelerate Intel’s competitiveness in the modem space. Since Qualcomm’s 4G modems routinely outperformed Intel’s in speed and yet Apple used separate modems across different iPhone carriers and regions, Apple held back the top speeds of Qualcomm parts so that devices made with Intel modems would deliver similar performance.
5G added all new levels of complexity to the modem engineering process. While Qualcomm is already working on its third commercial 5G modem, Intel reportedly faced power efficiency and cooling challenges with its first and second 5G modems. Additionally, the use of millimeter wave, sub-6 GHz, and lower-frequency radios in 5G devices make both individual and multiple antenna designs incredibly challenging.
In recent months, the company clearly began to focus on 5G networking components that wouldn’t be as thermally constrained as smartphone chips, while saying little about its relationship with Apple. Apart from a plan to sell iPhone modems, Intel’s most noteworthy 5G deal was with T-Mobile to supply unspecified low-frequency 600MHz components to the “Uncarrier.”
Intel’s exit from the 5G smartphone modem business leaves only four players in serious contention: Qualcomm, which holds the vast majority of 5G modem contracts; Galaxy phone maker Samsung; Chinese telecom giant Huawei; and smaller Taiwanese budget chipset maker MediaTek. While Apple has recently emerged as a potential modem maker, the company’s settlement with Qualcomm today included a six-year chip sourcing agreement plus a two-year extension option, suggesting that Apple likely won’t be ready to fully meet its own needs for at least half a decade.