Apple truce paves way for 5G iPhone
Apple has put its flagship product, the iPhone, ahead of distaste for the way Qualcomm does business in settling a bitter, two-year legal dispute with the chipmaker.
Apple needs chips that will connect to the new, fifth-generation wireless networks being introduced now or risk falling behind rivals. It had bet on Intel, but recently decided its would-be 5G supplier wasn't up to the task.
That led Apple back to Qualcomm - and spurred a sudden end to a long-running court fight over patents, component costs and royalties for one of the most critical parts of an iPhone.
Modems, or baseband processors, are what connects all iPhones and some iPads and Apple Watches to cellular networks and the internet on the go.
Throughout the fight, which centered on Apple's accusations that Qualcomm overcharges for patents on its technology, the iPhone maker played down the importance of the modem and Qualcomm's inventions. Just before the settlement was announced, Apple's lawyers were in a San Diego courtroom saying the component was just another method of connecting to the internet. In reality, Qualcomm's modems are leading a potential revolution in mobile internet - and Apple could have been forced to play catchup without them.
Intel, which dominates the market in personal computer chips, has struggled for decades in mobile. The company pledged that its 5G part was coming in phones next year. But within hours of Apple's deal with Qualcomm, and with it the loss of its prime mobile customer, Intel announced it would end its effort to produce a 5G modem for smartphones.
Apple's rival Samsung Electronics already has a 5G-capable phone on sale using Qualcomm's products. The San Diego- based chipmaker has also said it will have a better 5G modem ready by the end of the year - plenty of time for Apple to introduce a 5G phone in September 2020. "If they didn't settle with Qualcomm soon they'd miss next year's product," said Canaccord Genuity analyst Mike Walkley. "Building their own baseband will take years and Intel is behind. Maybe that was the final thing that got this done."
Apple already faces falling iPhone sales and a saturated global smartphone market. The company in January reported that holiday revenue declined year-over-year for the first time since the iPhone was introduced in 2007. As it pushes more services tied to its smartphone, Apple can't afford to lose potential customers because its technology isn't up to speed.
As in previous generations of wireless technology, Qualcomm is the market leader in 5G, which will let phones and tablets download videos and music, and open web pages much faster. It's also being heralded by backers as the gateway to connections for a flood of new devices and services.
The settlement with Qualcomm clears Apple's path to launching a 5G phone as early as next year. Apple and Qualcomm's agreement is a six-year pact, according to the joint statement.