Intel axes 5G modem plans after Apple and Qualcomm settle

“Chipmaker Intel conceded on Tuesday it would not release a 5G smartphone modem and was axing its plans to do so, just hours after rival Qualcomm made peace with Apple and set in motion a new era of co-operation between the companies,” Camilla Hodgson reports for Financial Times.

“Intel, which makes modem chips that go in smartphones, said it did not expect to launch a 5G phone chip, “including those originally planned for launches in 2020” — a reference to Apple’s planned 5G iPhone release,” Hodgson reports. “‘We are very excited about the opportunity in 5G and the ‘cloudification’ of the network, but in the smartphone modem business it has become apparent that there is no clear path to profitability and positive returns,’ said Intel chief executive Bob Swan.”

“As the feud between Apple and Qualcomm over intellectual property and licensing worsened, the phonemaker had become reliant on Intel for chips,” Hodgson reports. “But the risk it might not be able to launch a 5G iPhone in 2020 had put pressure on Apple, and was likely a ‘tipping point’ in the decision between Apple and Qualcomm to settle, said Geoff Blaber, analyst at CCS Insight.”

Read more in the full article here.

MacDailyNews Take: Yet another sad trombone for Intel, a company that’s been reduced to being embarrassed on every front.

SEE ALSO:
After settlement with Apple, Qualcomm still faces other potential legal fallout – April 16, 2019
Qualcomm and Apple settle, agree to drop all litigation – April 16, 2019
Intel rebuffs report, still plans to supply 5G modems for 2020 devices – April 5, 2019
Intel modem announcement likely means no 5G iPhone until 2020 – February 22, 2019

9 Comments

  1. How come Qualcomm stock rockets up so high and Apple stock barely moves? Didn’t Apple get anything out of that deal? I guess Qualcomm had Apple over a barrel. Most people don’t even know how much Qualcomm got from Apple and yet suddenly Qualcomm is worth about 20% more in value. Apple keeps getting screwed when it comes to lawsuits and in this instance, Apple simply caved and got nothing but a multi-year contract with Qualcomm sitting in the driver’s seat. Ugh!

    I don’t know what I can say about Intel Corp. except they must be way behind the curve when it comes to chip development. Thanks for nothing, Intel. Apple bet on the wrong horse and now has to suck on Qualcomm’s hind teat.

    1. These licensing fees are essentially Qualcomm’s entire business. Apple makes a billion dollars a week in profit.

      For Qualcomm this is dollars, for Apple it’s pennies (or fractions of pennies).

    2. I should add that we don’t know Apple came out poorly in the deal.

      The media release stated there was a payment from Apple to Qualcomm, but that would be expected. Apple has been withholding billions of dollars. No matter the outcome, some payment would have been made from Apple to Qualcomm.

      Qualcomm was worried that an Apple win would set a precedent endangering the unfairly charged fees from all of their customers. It’s possible Intel sat on this announcement for a bit, until Apple had settled the case on terms they were comfortable with (lower fees, and a deal that gives Apple enough time to build their own modem silicon)

      1. Exactly. I wouldn’t be surprised if Apple knew Intel potentially had nothing for 2020 and asked them not to announce that in exchange for business in other areas.

        I think this is a win/win from a business perspective, but obviously Qualcomm got the slightly better PR as they’re perceived as the ‘David’ in this case… taking on Goliath.

      1. You have no idea about the balance of this deal, so stop pretending you do.
        Of course Apple “paid Qualcomm” some unknown amount of money – that’s why the escrow account existed. The argument was over how much of that Qualcomm deserved from Apple. And, we don’t know how much they got.
        That said, it certainly seems that, if Qualcomm knew Intel was leaving the 5G business, they would have asked for more.
        The big question is: were Apple/Intel able to keep Intel’s plan secret from anyone at Qualcomm so that Apple got a better deal?

  2. Easy… Qualcomm had way more to lose than Apple… so that was priced into the stock.

    This IBM news only strengthens Qualcomm as they have a command over other manufacturers as well.

    Personally, I think Intel being in the market would have been a good thing.

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