Kuo: 2020 iPhones to Support 5G, Qualcomm and Samsung Likely to Supply Modems

ksec

macrumors 6502a
Dec 23, 2015
911
869
0
If true, Kuo just blew a huge hole in the theory that Apple came crawling back to Qualcomm on its knees and was forced to settle in order to have 5G in 2020.

That said, it doesn’t really make sense that Apple would add Samsung as a modem supplier. 1) The whole point of dual sourcing is to reduce supply risk and gain pricing leverage. Neither should be necessary since Apple just negotiated a multi-year supply agreement. TSMC will have no issue cranking out the necessary quantity. 2) To get the reported $8-9 royalty rate for Qualcomm’s baseband chips—cheaper than the $7.50 Apple was paying for 3G modems in the 2007-2011 timeframe, and certainly no more than the 4G modems in the 2013 agreement, Qualcomm would have wanted exclusivity. (But I believe that behavior also has antitrust implications, so maybe exclusivity was no longer a requirement?) 3) Samsung had been playing hard to get, recently claiming they couldn’t sell their 5G modems to Apple because they were unable to manufacture sufficient quantity. 4) Apple is making their own baseband chip, why would they bother second sourcing them for the short period of time they’ll need to rely on anyone else at all?
Exactly. The Apple haters/naysayers are looking for anything to make Apple look like the bad guy or that they lost/caved in. There’s no logic to their reasoning other than....because Apple.

Qualcomm actually wanted $13 (3.25% royalty on a $400 capped device value) per iPhone. So if that $8-9 figure is true it’s actually a big discount (31-39%) compared to what Qualcomm was looking for.

Further, Apple and Qualcomm ceased all lawsuits. So it makes sense that there are other non-essential patents included in that licensing agreement.

Yet we have people throwing around an old $7.50 figure so they can claim Apple lost by supposedly paying more ($8-9).
Yes. Just a few things.

1. "$7.50 Apple was paying for 3G modems"

The $7.5, $8-9 are for Patents fees, not for Modems. Those are in $30s.

2. Apple is making their own baseband chip, why would they bother second sourcing them for the short period of time they’ll need to rely on anyone else at all?

The whole point of the 6 years deal ( including this year ) is that Apple knew they are going to take at least 3 - 4 years to get an 5G Modem. And that is if the Modem is any good compared to Qualcomm's 3 - 4 years from now. We will see if Intel decide to sell off their Modem division to Apple in one way or another.

3. Samsung

Qualcomm forbid Samsung to sell modem or Soc to anyone else. I highly doubt Qualcomm will make a new arrangement with Samsung just for them to produce and compete with themselves. And it was Qualcomm that had the upper hand in the case.

4. So if that $8-9 figure is true it’s actually a big discount (31-39%) compared to what Qualcomm was looking for.

Qualcomm wanted 5%, and they are willing to back to 3.25%. Although the price are capped to $400 since 2018, Apple had never had reached the cap as it was changed to Foxconn on its BOM cost, which even the iPhone XS Max don't reach $400. If you do an average across all iPhone, from 8, XR, XS and take it as around $250, a 3.25% gives $8.125 per phone. Now it is likely a fixed cost per unit as the license are Direct to Apple and not to Foxconn, Apple could no longer use BOM cost to shield its value.

And as it stand everything remain pretty much the same as pre Intel Modem era, except without further price increase from Qualcomm. I cant say Apple had lost, but they didn't win as they thought they would either.
 

Cosmosent

macrumors 6502a
Apr 20, 2016
898
912
0
La Jolla, CA
RE: "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."

That makes NO sense ... AAPL just cut a Deal with Qualcomm !
 

Jcxa

macrumors member
Sep 15, 2016
67
134
0
Athens, GA
Hmmm, I'm underwhelmed about any technology that will not be available to me for years to come and yet still forced to underwrite. Sorry to rain on your parade.
 

littyboy

macrumors 6502a
Jun 12, 2009
650
803
0
So Kuo either throws stuff against the wall and hope it sticks.... or tells you rumors thats obvious by now.... and we still listen to this joke of an "analyst"
 

recoil80

macrumors 68030
Jul 16, 2014
2,517
2,056
0
Has Apple not learned from dual-sourcing their modems? Some people don’t want the inferior modems, they want Qualcomm. I know I’d rather have theirs than anyone else’s.
What the report is suggesting is Apple will have two suppliers for two different markets. As far as I know at least in Europe Sub-6GHz will be the first to start so I wonder if our market will be served by Samsung.
I don't want different modems on the same iPhone model, like I didn't like the Samsung vs TSMC chips back in the day. If they want two suppliers I hope Kuo is right and will be in different markets, so when buying an iPhone I'll know what I'll get.
 

TallManNY

macrumors 601
Nov 5, 2007
4,343
1,189
0
Yes. Just a few things.

1. "$7.50 Apple was paying for 3G modems"

The $7.5, $8-9 are for Patents fees, not for Modems. Those are in $30s.

2. Apple is making their own baseband chip, why would they bother second sourcing them for the short period of time they’ll need to rely on anyone else at all?

The whole point of the 6 years deal ( including this year ) is that Apple knew they are going to take at least 3 - 4 years to get an 5G Modem. And that is if the Modem is any good compared to Qualcomm's 3 - 4 years from now. We will see if Intel decide to sell off their Modem division to Apple in one way or another.

3. Samsung

Qualcomm forbid Samsung to sell modem or Soc to anyone else. I highly doubt Qualcomm will make a new arrangement with Samsung just for them to produce and compete with themselves. And it was Qualcomm that had the upper hand in the case.

4. So if that $8-9 figure is true it’s actually a big discount (31-39%) compared to what Qualcomm was looking for.

Qualcomm wanted 5%, and they are willing to back to 3.25%. Although the price are capped to $400 since 2018, Apple had never had reached the cap as it was changed to Foxconn on its BOM cost, which even the iPhone XS Max don't reach $400. If you do an average across all iPhone, from 8, XR, XS and take it as around $250, a 3.25% gives $8.125 per phone. Now it is likely a fixed cost per unit as the license are Direct to Apple and not to Foxconn, Apple could no longer use BOM cost to shield its value.

And as it stand everything remain pretty much the same as pre Intel Modem era, except without further price increase from Qualcomm. I cant say Apple had lost, but they didn't win as they thought they would either.
Nice analysis. It was a settlement, so both sides got something out of it. I think Apple won because they reduced their payment and they stopped playing this dangerous game were courts are potentially stopping sales of the iPhone. Apple was gambling bigger damages than just being charged a couple of billion dollars. So ending the lawsuit and getting complete visibility to a set of costs for the next six years is a huge win. Even if Apple would like to pay something closer to what other cellphone makers pay.
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Good point, I would be more interested in that also. No rush for me though as I am pretty content.
And hopefully these 5G modems don’t suck down battery too fast. IPhone battery got to the point of being a non-issue for me in the X and now the Xs. Not sure how faster data is going to help me on my phone since good 4G already can stream HD movies without a problem. So I hope there aren’t heat and battery compromises made in pursuit of this faster speed.
 

ksec

macrumors 6502a
Dec 23, 2015
911
869
0
Whether we have 4G or 5G, what good is it if the wireless provider doesn't improve the coverage?
You do actually get slightly better signals with 5G in the Cell edges.

But the only true way to solve it is to switch providers.
 

RumorConsumer

macrumors 6502a
Jun 16, 2016
827
481
0
Intel has already announced it is leaving the low power mobile wireless modem market.

I wonder if it’s partially because they are now a year or two behind TSMC in process technology.
so who will make the baseband in 2019?
 

MoreRumors?

macrumors 6502a
Feb 28, 2018
723
508
0
Inside TC's bank account
Get a better wireless provider.
I use Verizon and they are the better provider. However, I don’t think any other providers out there is any better. I think there are not enough cell towers and this is the issue. If you live or work in an area with a large population, you will see better service but for other areas, service is not as great.
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You do actually get slightly better signals with 5G in the Cell edges.

But the only true way to solve it is to switch providers.
I think areas with the large population will get more cell coverage and thus better service. I have Verizon and the “coverage map” on their website is misleading. I have traveled to different cities and noticed larger cities get better service and smaller towns the service slows down. I can see any of the service providers not wanting to invest in more cell towers in these areas. Even in a large city, the service is not the same throughout.