(Bloomberg) – Apple Inc. has begun building its own cellular modem for future devices, a move that would replace Qualcomm Inc. components, the chief chip executive told Apple staff on Thursday.
Johny Srouji, Apple’s senior vice president of hardware technologies, made the disclosure in a meeting with Apple employees, according to people familiar with the comments. Qualcomm shares fell as much as 6.3% in extended trading.
“This year, we began development of our first internal cellular modem that will enable another key strategic transition,” he said. “Long-term strategic investments like these are a critical part of enabling our products and ensuring that we have a rich portfolio of innovative technologies for our future.”
A cellular modem is one of the most important parts of a smartphone, as it allows phone calls and Internet connection through cellular networks.
Srouji said that the $ 1 billion acquisition of Intel Corp.’s modem unit in 2019 helped Apple build a team of hardware and software engineers to develop its own cellular modem. He said the modem is one of the few wireless chips the company designs, including the W-series in the Apple Watch and the U1 ultra-wideband chip in the iPhone for accurate location information.
The latest 5G iPhones use Qualcomm parts. Before that, Apple used parts from Intel for a few years and then bought that business unit from the chipmaker.
Srouji didn’t say when the cellular modem would be ready to ship products, but a 2019 patent agreement between Apple and Qualcomm includes a six-year license agreement. Qualcomm collects license fees from phone manufacturers under the wireless patents it owns, regardless of whether they use its chips or not.
In the employee meeting, Srouji also highlighted Apple’s other work on chips, including the new M1 processors in the latest MacBook Air, MacBook Pro and Mac mini. Apple is working on a “family” of Mac chips, Srouji said. Apple plans updates designed to improve Intel’s faster computer chips, Bloomberg News reported earlier this week.
Apple has hired Qualcomm engineers for years to help build the modem, and it has effort-focused offices in San Diego, at its Cupertino, California headquarters, and in Europe.
The move extends Apple’s push toward greater reliance on its own parts at the expense of Qualcomm, Intel and others. Qualcomm gets about 11% of its revenue from Apple, while Intel gets about 7% of the iPhone maker’s sales, according to data compiled by Bloomberg.
Apple began shipping its own chips in 2010, with the main A4 processor in the iPhone 4 and the original iPad. Since then, Apple has expanded this work to custom camera processors, chips to handle artificial intelligence tasks and collect motion data, along with chips for Apple Watch, Apple TV, and headphones.
Mac processors are some of Apple’s most ambitious chip designs to date. The development of the cellular modem is also a challenge.
Nota Original:Apple Starts Work on Its Own Cellular Modem, Chip Chief Says (1)
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