Analyst: Apple’s going to dump Intel modems if they keep lagging Qualcomm

Northland Capital Markets’ Tom Sepenzis “thinks Qualcomm is going to come out on top in the war for mobile baseband modem chips, where Intel has lately been its biggest obstacle,” Tiernan Ray reports for Barron’s.

“Intel, you’ll recall, this year won part of the business to supply the modem in Apple’s iPhone that Qualcomm had previously had to itself for several iterations of the device,” Ray reports. “But Sepenzis points to reports that Intel’s modem is slower than Qualcomm’s, and thinks Apple might cut off Intel if it continues to lag Qualcomm.”

There have been several reports over the past month that have compared the speeds associated with both the INTC and QCOM modems in their respective iPhone models, with INTC coming up short. Apple apparently has throttled the speeds on the QCOM modems to keep the experience consistent across carriers, with the QCOM X12 modem capable of 600 mb/s while the INTC XMM 3360 modem tops out at 450 mb/ s. While Apple will certainly keep a second source if possible, it isn’t going to do so for too long if it has to handicap half of its devices. This should give QCOM a path towards recapturing all of Apple over the next two years if Intel doesn’t find an answer. Currently, the next generation INTC XMM 7480 modem is still capped at 450 mb/s. QCOM has already introduced the X16 modem, capable of 1 gb/s, the first gigabit modem. — Tom Sepenzis, Northland Capital Markets analyst

Read more in the full article here.

MacDailyNews Take: As we wrote last month:

So, Apple has chosen to benefit themselves (getting multiple modem suppliers to drive down cost, even if one is markedly inferior) at the expense of their iPhone customers who, if they all had superior Qualcomm modems inside their iPhones, would be getting nearly twice the Mbps than they are now.

In a nutshell: Apple has chosen to maximize their potential profits over delighting their customers, making the following statements sound like utter bullshit:

• “We’re very simple people at Apple. We focus on making the world’s best products and enriching people’s lives.” — Tim Cook

• “I want you to be confident that Apple is not going to change. I cherish and celebrate Apple’s unique principles and values. Steve built a company and culture that is unlike any other in the world and we are going to stay true to that — it is in our DNA. We are going to continue to make the best products in the world that delight our customers and make our employees incredibly proud of what they do”. — Tim Cook

In this case, Tim, we’re certainly not delighted and Apple employees should not be incredibly proud.

SEE ALSO:
Yes, Apple is throttling download speeds for iPhone 7 and 7 Plus Verizon and Sprint versions – November 19, 2016
Apple’s modem choices may leave Verizon iPhone users feeling throttled – November 18, 2016
Tests show iPhone 7 Plus models with Qualcomm modem perform significantly better than those with Intel modem – October 20, 2016

15 Comments

  1. I don’t believe we have seen sufficient evidence to know that Apple is throttling the Qualcomm modem.

    What we know is that the same Qualcomm modem runs faster in other non-Apple devices. However, we do not know that the Intel modem would not run faster in those other devices as well.

    Perhaps it is something about the Apple phone that prevents all modem chips from performing at their highest rates. Given all the compromises in the new MacBook Pro, this would seem to be consistent with Apple’s current standard operating procedure.

  2. I think it’s very smart of Apple to second-source their components. Without this, they could be held hostage by the single supplier when it comes to contract details.

    1. Exactly.

      If Apple throttles phones to have equal performance they get shit for it.

      If Apple doesn’t throttle performance and some phones are much faster than others, they get shit for it from both customers and from their telecom partners.

      If Apple only gets the faster Quallcomm chips and has to charge more or has shortages due to single supplier dependency, they get shit for it.

      This is one case where there was not perfect answer so Apple deserves the benefit of a doubt. They had to make a choice and none would make everyone happy.

  3. Intel certainly need to be seen to be getting their act together. Qualcomm are now delivering what is perceived to be faster baseband modem chips while Intel’s CPUs are coming under pressure from ARM chips. There are a lot of people who do not need Intel compatibility in an Apple laptop and they could be very well served by an ARM powered laptop.

    If Apple starts producing ARM powered laptops, that’s a one way street and Intel won’t be picking up alternative orders to compensate.

  4. I would love to see this escalate even more. I have the ATT chip and to me, it is on par with my iPhone 6 I gave up. I would love to have a Qualcomm chip and the speed that it is supposed to deliver. My 7+ is faster than the 6 in all other areas, but not that much so in the modem area.

    I would certainly turn in my 7+ black 256 for a faster modem. I am out of the office often and tether my MBAir quite often. I could use the speed.

  5. Dump whoever at Apple decided to even use an inferior component if this is true. Tim and Eddy are doing a great job of destroying Apple. Hopefully Eddy won’t look like a fat arrogant drunk again at Recode. Also great job Jeff Williams on the brilliant supply chain management. Great job don’t forget to sell all your Apple stock as all the other executives have. 2017 will be the year Google passes Apple in market cap for good.

  6. Thank you MDN for your commentary. “Apple has chosen to maximize their potential profits over delighting their customers.” It would be hard to summarize the company’s current product malaise in several categories any better than that. I hope Apple leadership reads this forum…I hope even more they change direction.

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