mi7chy
Suspended
That's Tim Cook's doing not Qualcomm. Prior to this Apple was dual sourcing from both Qualcomm and Intel.
Intel Exiting 5G Smartphone Modem Business, Won't Make 5G iPhone Chips at All
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That's Tim Cook's doing not Qualcomm. Prior to this Apple was dual sourcing from both Qualcomm and Intel.
Sure it is.
First Intel told Apple they weren't ready with 5G and maybe they weren't willing to make investments in developing the 5G modem for a smartphone, than Apple had little choices but to settle with Qualcomm and finally Intel made the announcement.
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I guess Qualcomm knew Intel wasn't ready for 5G and expected Apple to need their modem in 2020, that's why they waited for the settlement. They also had some positive verdicts from other cases like in Germany about old iPhones, so they could leverage them to obtain a better deal.
I think Apple had a case this time, but it was too risky to wait for a court to rule in their favour. What if they lost? And even if they won they could have missed the 2020 deadline. Having good 5G modems in their 2020 lineup is more important than winning a case against a supplier. Apple has plenty of cash, they can easily pay whatever Qualcomm asks and in the meantime continue to work on their modems. I wonder if they'll hire some people from Intel now that they're cancelling the 5G modem for smartphone by the way.
I'm sure it takes years to build a modem, so they'll get there but not in 2020 and maybe not in 2021, so the right decision is to stick with the best supplier, so they settled with Qualcomm.
jonplackett
macrumors member
So which caused which?
Did apple settle and then intel give up.
Or did intel give up and give apple advanced notice so they could settle?
Did apple settle and then intel give up.
Or did intel give up and give apple advanced notice so they could settle?
Qualcomm owns the patents. Apple would still have to pay royalties even if they make a modem chip.
jonplackett
macrumors member
Also, shame they couldn’t have done this months ago and had 5G this year. I won’t be buying a non-5g iPhone.
killhippie
macrumors 6502a
I'm glad this spat is over considering the cost of iPhones having Qualcomm modems makes sense with 5G, which in the UK probably wont be a thing till 2021 tbh and even then not huge coverage, 4G is still slack here, even though EE who I'm with are probably at the forefront of pushing 5G, but with with O2 not even having Volte in most places I'm not holding my breath. I do wonder if nobody had told any Apple user they had intel chips in their phones would they even have noticed? My Xs has great coverage and is just as good as my 6s was, I cant tell the difference and signal wise both are exactly the same, taking them both out yields no difference in speeds or reception or dropped calls from my limited testing where I live and travel. Apart from 5G being in the bag now the main issue going forward is probably Apples lousy antenna designs.
And what's the reality? You act like you know.
FFR
Suspended
Intel looks to have been caught completely blindsided by the settlement. Had this come out earlier Qualcomm would have been in a better negotiating position, now the one time payment with a 6 year licensing plan, 2 year extension and backdated agreement date makes sense complete sense.
laptech
macrumors 601
You just gotta laugh at the Apple fans who are trying to spin it that Qualcomm caved in. Are they seriously that deluded?
Qualcomm was and still is in a very very strong position on 5G modems. Intel have been struggling for months to get a viable 5G modem ready. Apple have stated that they will not be ready with their own 5G modems until a year after the roll out of 5G and Huawei was a non starter due to the US governments investigation into the company. Therefore, with 5G quickly approaching, who else could Apple have turned to for a good quality 5G modem that could be provided to them in time and in the quantities they would have wanted. Basically there isn't anyone, only Qualcomm.
Qualcomm was and still is in a very very strong position on 5G modems. Intel have been struggling for months to get a viable 5G modem ready. Apple have stated that they will not be ready with their own 5G modems until a year after the roll out of 5G and Huawei was a non starter due to the US governments investigation into the company. Therefore, with 5G quickly approaching, who else could Apple have turned to for a good quality 5G modem that could be provided to them in time and in the quantities they would have wanted. Basically there isn't anyone, only Qualcomm.
DNichter
macrumors G3
Intel is behind in a lot of areas when it comes to consumers. Soon enough, Apple will begin using their own chips and the rest of the industry will move to a similar processor. If you need to constantly be tethered to the wall using an Intel processor, you won’t be part of the future. Time for them to transition, similar to what Microsoft did.
PickUrPoison
macrumors G3
You’re right—Apple had absolutely no reason to compromise. And if you think Qualcomm had nothing to lose, you have no idea what was at stake for Qualcomm.
Those who try to spin this as Apple being forced to come crawling to Qualcomm for 5G conveniently ignore Samsung’s Exynos 5100 modem, which we know Apple had under consideration. I haven’t seen anyone claim that Samsung’s modem wasn’t a viable option for 2020.
Did Apple make a one-time payment to Qualcomm? Of course they did; they and their suppliers have been holding back Qualcomm’s royalty payments for years in retaliation for Qualcomm first holding out a billion dollars of payments due Apple under a separate rebate agreement.
Apple never disputed that they owed Qualcomm fair and reasonable royalties for their SEPs, but the whole point of Apple’s suit against Qualcomm that settled today was that Qualcomm wouldn’t honor their obligation to charge FRAND rates. (The double-dipping via the license agreement was not fair, since Qualcomm’s patents were exhausted when they sold their baseband chips to Foxconn/Wistron.)
With Qualcomm’s entire business model at stake, they had every reason to negotiate a fair deal that would be acceptable to Apple. Apple will still build their own baseband chip; note that the duration of the chipset supply agreement is unspecified. Apple's now got visibility into their license fees for 6-8 years including the license to make their own baseband chip.
Of course Qualcomm still has the FTC action to deal with after Koh delivers her decision, and without competition from Intel, Qualcomm’s antitrust issues (worldwide) aren’t going to get any better. The billions of dollars from a supply agreement with Apple (which Qualcomm can definitely put to good use paying their massive fines) along with the de-risking of having their cash-cow business model upended were all the motivation Qualcomm needed to come to the table and play ball. (And maybe they didn’t like the jury
)
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centauratlas
macrumors 68000
I think both Apple and Qualcomm "caved". It was a lose-lose that they turned into a win-win. Apple for 5G, Q for $.
Qualcomm played their cards really nicely. I don't think they were worried about their chances of losing vs Apple.
Taking in consideration articles like this: https://semiaccurate.com/2018/11/12/intel-tries-to-pretend-they-have-5g-silicon-with-the-xmm-8160/ , I would say Qualcomm was most likely aware about Intel's progress with 5G and knew Apple won't be able to wait for ever.
Talking about spinning things. We are all well aware that Qualcomm and Smasung have quite a tight relationship.
We know Samsung was able to launch a CDMA compatible US Galaxy S6 running with an Exynos processor thanks to their negotiations/relationship with Qualcomm.
So it's also plausible to assume that the real reason why Samsung refused to sell Apple a 5G modem is: Qualcomm.
We won't see a 5G iphone sooner than 2020 so Samsung's excuse that they won't be able to meed Apple's demand doesn't make much sense.
In the end it actually looks like Apple had no other choice for 5G.
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MoreRumors?
macrumors 6502a
This doesn't inspire much confidence from Intel when they are pulling out of the smartphone modem altogether. Intel should continue to work on it as they are not now under pressure to have one working as good as Qualcomm's modem by 2020. This is just another disappointment coming from Intel and not good for their business.
MoreRumors?
macrumors 6502a
I agree. Intel was given the opportunity to be the supplier for the 5G modem, however, I am not an engineer and don't know what difficulties they encountered. I am not going to criticize Intel but I won't hold back in my disappointment with them.
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That's interesting to hear. If Intel did well in performance equivalent to Qualcomm's modem, wouldn't they sell to other companies?
Abazigal
Contributor
You’re right—Apple had absolutely no reason to compromise. And if you think Qualcomm had nothing to lose, you have no idea what was at stake for Qualcomm.
Those who try to spin this as Apple being forced to come crawling to Qualcomm for 5G conveniently ignore Samsung’s Exynos 5100 modem, which we know Apple had under consideration. I haven’t seen anyone claim that Samsung’s modem wasn’t a viable option for 2020.
Did Apple make a one-time payment to Qualcomm? Of course they did; they and their suppliers have been holding back Qualcomm’s royalty payments for years in retaliation for Qualcomm first holding out a billion dollars of payments due Apple under a separate rebate agreement.
Apple never disputed that they owed Qualcomm fair and reasonable royalties for their SEPs, but the whole point of Apple’s suit against Qualcomm that settled today was that Qualcomm wouldn’t honor their obligation to charge FRAND rates. (The double-dipping via the license agreement was not fair, since Qualcomm’s patents were exhausted when they sold their baseband chips to Foxconn/Wistron.)
With Qualcomm’s entire business model at stake, they had every reason to negotiate a fair deal that would be acceptable to Apple. Apple will still build their own baseband chip; note that the duration of the chipset supply agreement is unspecified. Apple's now got visibility into their license fees for 6-8 years including the license to make their own baseband chip.
Of course Qualcomm still has the FTC action to deal with after Koh delivers her decision, and without competition from Intel, Qualcomm’s antitrust issues (worldwide) aren’t going to get any better. The billions of dollars from a supply agreement with Apple (which Qualcomm can definitely put to good use paying their massive fines) along with the de-risking of having their cash-cow business model upended were all the motivation Qualcomm needed to come to the table and play ball. (And maybe they didn’t like the jury
I think that at the end of the day, both are (profit-maximising) businesses. In a protracted legal battle, neither would have emerged unscathed, and both sides likely weighed the pros against the cons, and decided that a drawn out fight just wasn’t worth it.
On one hand, Qualcomm gets its money back (Apple is easily their top customer thanks to the price of their iPhones and the sheer quantity they ship). On the other hand, Apple simply couldn’t afford risking the iPhone not having 5g and jeopardising their entire business model.
It is what it is.
kdarling
macrumors P6
Nonsense.
Especially with all the kickbacks that Jobs had insisted upon, Apple was a minor part of Qualcomm profit.
Qualcomm is a major player in creating and implementing the communications that the world has enjoyed, starting with 3G. They don't need Apple at all, while Apple absolutely needs Qualcomm.
PickUrPoison
macrumors G3
1) On what basis do you say Qualcomm wasn’t worried about losing to Apple?
2) I’m sure all parties knew Intel was running behind, despite their claims they would deliver this year. 5G not being in 2019 iPhones was locked months ago. With a) Apple’s history of a leisurely 4G rollout (for what was a major performance jump) without appreciable sales impact and b) 5G being years from any sort of widespread coverage—let alone the fact that 5G will have very little utility on mobile devices even once coverage is widespread—what makes you think Apple needs 5G support even in 2020? Sure they’d like it, but there was no indication they were willing to be held up at gunpoint by Qualcomm to get it.
iPhone users aren’t spec chasers, and 5G in iPhones for 2020 is a lot bigger deal to non-Apple MR posters than it is Apple and their actual customers. I think Apple would have been just fine with even a 2021 Intel 5G modem, in the absence of major concessions from Qualcomm. (And I assume Apple will no longer be paying license fees based on the retail value, which Qualcomm had already reduced the cap on assessed value from $500 to $400 last year).
3) Sure Apple and Samsung aren’t the best of friends, but business is business. Samsung was no doubt angling for leverage to extract premium pricing from Apple, but there’s no reason to think they wouldn’t have been willing or able to supply the Exynos 5100 to Apple for 2020. Samsung has plenty of capacity at 10nm. What leverage would Qualcomm have over Samsung? Verizon’s shutting down CDMA this year and for all we know Samsung won’t even be using Snapdragon in the US for the S11. Samsung doesn’t have any particular love lost for Qualcomm.
In summary, I don’t see significant leverage over Apple for Qualcomm, and plenty of reasons Qualcomm would like to move on. For the right price, Apple’s all for it... after all, business is business
SoN1NjA
macrumors 68020
Yeah ideally there would be competition for Apple to choose from ― but, Samsung and Huawei make modems so QC isn't the only player
But to be honest, I'd rather have a working $1100 phone than be caught up in legal nonsense or know about how the market is unfair