Reuters: ‘Apple Puts Modem Engineering Unit Into Chip Design Group’

Stephen Nellis, reporting for Reuters:

Apple Inc has moved its modem chip engineering effort into its in-house hardware technology group from its supply chain unit, two people familiar with the move told Reuters, a sign the tech company is looking to develop a key component of its iPhones after years of buying it from outside suppliers.

Modems are an indispensable part of phones and other mobile devices, connecting them to wireless data networks. Apple once used Qualcomm Inc chips exclusively but began phasing in Intel Corp chips in 2016 and dropped Qualcomm from iPhones released last year.

Johny Srouji, Apple’s senior vice president of hardware technologies, took over the company’s modem design efforts in January, the sources said. The organizational move has not been previously reported.

Recall the Cook Doctrine:

We believe that we need to own and control the primary technologies behind the products we make, and participate only in markets where we can make a significant contribution.

Right now Apple only has two choices for modems: Qualcomm and Intel. Qualcomm’s modems have historically been superior, and probably still are, but Apple’s relationship with Qualcomm is contentious, to say the least. At Qualcomm’s FTC trial last month, Jeff Williams said “We had a gun to our head” when it came to negotiating with Qualcomm for iPhone modems, and that it cost Apple $1 billion a year in licensing fees Apple considers unfair. Considering that Apple’s only alternative is Intel, who’ve always been second-fiddle to Qualcomm in modems, yeah, I’d say this qualifies as a “primary technology” Apple needs to “own and control”.

Imagine what a spot Apple would be in if they relied on Qualcomm for CPUs.

Thursday, 7 February 2019