Intel, previously expected to power Apple’s 5G iPhone in 2020, announced Tuesday that it’s exiting the 5G smartphone business and doesn’t plan to launch any 5G modem products.
The announcement came on the same day that rival Qualcomm and Apple settled their long-running legal battle over tech and licensing, abruptly ending a trial in federal court that had just kicked off in San Diego and was expected to stretch over the next month.
The tech giants agreed to dismiss all litigation between the two around the world, and agreed to a six-year license agreement that includes a two-year option to extend, and a multiyear chipset supply agreement. As part of the settlement, Apple will also pay Qualcomm an undisclosed amount.
“The IP settlement between Apple and Qualcomm is a clear admission by Apple that Qualcomm is an unavoidable partner when it comes to 5G mobile innovation,” commented Malik Saadi, VP of strategic technologies at tech advisory ABI Research.
Apple had been seeking nearly $1 billion from Qualcomm, claiming the supplier abused market powers and demanded unfair royalties, with iPhone suppliers including Foxconn and Pegatron together also seeking billions from the chip giant. Qualcomm, meanwhile, was seeking $7 billion in royalty payments from Apple, asserting the smartphone maker withheld payments for Qualcomm -patented technology used in iPhones.
The legal dispute, which started in January 2017, has been far-reaching and saw Apple turn to Intel for modems.
Qualcomm has been leading the 5G modem race, first debuting the Snapdragon X50 modem with support for 5G millimeter wave spectrum bands, and then in February unveiled the Snapdragon X55 with both mmWave and sub-6 GHz support.
“Qualcomm is set to be the largest supplier of 5G mobile modems by far,” Saadi said. “The company may face a certain level of competition from captive vendors such as Huawei or Samsung, but this will be limited and confined.”
Many of the world’s first 5G smartphones are using Qualcomm technology, including Samsung’s 5G Galaxy 10 S, which is using the Snapdragon 855 platform combined with the X50 modem.
While rival device makers including Huawei are debuting 5G phones this year, Apple wasn’t expected to launch until 2020 (with some questioning even this timeline) because of its reliance on Intel for modems.
“Now that Apple has switched back to Qualcomm as 5G modem partner, the pressure is on Qualcomm to demonstrate they can succeed where Intel failed – enabling Apple to bring 5G to iPhone in 2020 and differentiate effectively in what is going to be a highly competitive market,” commented Saadi.
In a statement Intel CEO Bob Sawn said 5G is still a priority for the company but “in the smartphone modem business it has become apparent that there is no clear path to profitability and positive returns.”
Intel said it will be assessing the opportunity for 4G and 5G modems in PCs, IoT and other data-centric devices. The company will also continue to invest in its 5G network infrastructure business.
Qualcomm, meanwhile, still awaits a ruling from a judge in California in a separate case over FTC accusations that Qualcomm’s royalty business was used to squash competition in the mobile chip market.
Additional details will likely pop up on the companies’ respective earnings calls that are just around the corner. Intel releases quarterly earnings April 25, Apple will report April 30, and Qualcomm earnings are slated for release May 1.