Published in Mobiles

Intel spends $2 billion a year on modems

by on05 November 2018

Industry sources

Each year Intel invests some $2 billon to please one large modem customer - Apple - and the level of investment will likely increase in the near 5G future.

Our sources said at least $2 billion as it is hard to combine the whole cost of a modem chip development and the fact that Intel became the sole provider of modems for Apple definitely helps growing revenues.

Apple which is in serious dispute with Qualcomm over  licensing practices decided to go completely with Intel and the iPhone XS and XR are the first Intel only modem-based products from the house of Apple.

Apple doesn’t want to pay royalties to Qualcomm and has a custom-tailored deal with Intel, which wants to be a player in the 4G / 5G modem arena. Intel currently has some design wins in the PC space too and it is hoping to grow the modem market to smart health, connected transportation, VR and industrial applications.

Intel already shared its aspirations to shop the commercial customer devices based on its XMM 8060 5G NR modem in mid-2019 but to our knowledge these are PC customers rather than Apple next generation phones. Intel hopes that its XMM 8060 modem can accelerate deployment of 5G-ready devices prior to anticipated broad deployment of 5G networks in 2020.

CDMA was the key

Intel managed to solve one big problem for its modem with its 2018 generation, CDMA support. Intel 7560 the modem, inside the latest generation phones, has the Gigabit LTE support, LTE FDD/TDD, LAA as well as the crucial CDMA/EVDO. Some huge markets like China, Japan and Verizon in the US rely on CDMA and therefore Apple had to wait for late 2018 to go Intel only. Before 2018 XMM 7560 Intel did not have CDMA support.

The next generation late 2019 iPhone will likely feature the Intel XMM 7660 Intel’s Cat 19 modem capable of 1.6 Gbps, MIMO, Carrier Aggregation and a few other tricks. Qualcomm is shipping Snapdragon X24, 2 Gbps modem today and it will have them massively available with the introduction of phones based on the next generation Snapdragon 855. Let’s say millions of phones with X24 modem will start shipping in spring 2019.

Apple is a single, but it the largest volume customer, so it can generate a lot of sales and with some home that via Mobile Eye sales channels intel can grow in connected cars and especially in always connected 5G PCs later next year. In Q3, Apple sold 41.3 million iPhones but it is very hard to get the mix Intel versus Qualcomm but with 216.76 million phones sold last year it is easy to presume that in 2019 the Intel to Qualcomm modem mix will go largely in Intel’s favor.

Intel’s and Apple’s future is 5G but not in 2019 as some early adopters gathered around Qualcomm as well as Samsung and Huawei plan. Apple will do 5G in 2020 and it is unlikely that this will upset its hypnotized customers as Apple is often late to adopt new technologies. Just think about the OLED, wireless charging, 3G, 4G, to name a few and they still manage to impress its customers with very fast SoC performance and extraordinarily flashy finish.

Last modified on 05 November 2018
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