Published in Mobiles

Apple continues to pay Qualcomm if it drops its modem

by on02 November 2017

Licensing still on

There was a lot of noise about the recent news that Apple might skip the Qualcomm modem hardware for its 2018 phones, but even if they make this decision, QTL (Qualcomm licensing) will still get money from Apple.

There is simply no way out for Apple. The company that makes 1319 Euro (1539.71 US Dollar) for a single iPhone X 256 GB, is arguing that a few percent of the Foxconn cost should not go to Qualcomm for the licensing. This is what the argument is all about.

Fudzilla was one of the first to ever confirm that Intel got a piece of the iPhone modem business. Apple, like any other big player, likes to dual source its suppliers. There are numerous reasons and one of the main ones is that it can play the competitors against each other in order to get a better price. Of course, having two suppliers offers a certain stability in supply as it is unlikely that both suppliers will end up having the same issue. This is why analysts don't like thatthe  iPhone X only get OLEDs from Samsung, as Samsung probably makes good money out of it and has a lot of power over Apple, at least until a second supplier comes along in the future. 

Intel CMDA modem is 2018

Apple's second modem supplier for iPhone 7 and now 8 and X is Intel. Intel is currently shipping its XMM 7480 modem for iPhone 8 and X and this modem doesn’t support CDMA. Intel's employee, back at Mobile World Congress 2017, officially confirmed to Fudzilla that the follow up Intel XMM 7560 is coming next year.

Intel got the CDMA support from VIA, yes that VIA. If you think modems are easy, just ask Nvidia which spent $367 million to get the modem capability from Icera that didn’t get it anywhere. After further millions of investment, Nvidia had to shut things down, as the so called, soft modem in 4G didn’t really work as it should.

The fact about CDMA

Many connect CDMA with US large carrier the mighty Verizon. While this is totally correct and both Verizon and the much smaller Sprint use CDMA technology, there is one much bigger player which uses and needs CDMA support. China Telekom in September 2017 managed to grab the attention of 240.56 million customers.

Verizon US - largest carrier in Q2 2017 - had 147.236, about 97 million less. Without going into any details, if you combine just these two goliath big players, you reach 387.8 million customers, which is quite a big number.

So imagine this, Apple is betting that Intel will use VIA technology to address 387.8 million customers and potentially eliminate Qualcomm from the equation.

Cannot get away from general license 

Let's not forget that this is just the iPhone part of the story as the Qualcomm Snapdragon modem is being used in the Apple watch 3 as well as iPads.

The best comes at the end. Even if Apple decides to phase all Qualcomm Snapdragon modems from iPhone 2018, it will still have to pay the license to Qualcomm. That is what the license dispute is all about.

Apple being Apple wants a better deal than anyone else, and Qualcomm’s QTL is standing its ground. And Wall Street and investor readers please wake up, almost every dispute of this magnitude ends with a settlement. Our GPU centric readers will remember that after Nvidia CEO, Jensen Huang’s famous „Can of whoopass“ dispute with Intel and chipset, finished with a multimillion dollar win for Nvidia, so a settlement. It took almost three years from the dispute to settlement.

Whenever this Apple dispute is over, it is highly likely that QTL will get a fat check from the space ship campus as the last time I checked, US was a country that had a very strict line about patents and licensing. 

Last modified on 02 November 2017
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