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Intel Blames 5G Exit On Apple's Settlement With Qualcomm

Intel XMM 8160 5G modem.
(Image credit: Intel)

According to a previous Bloomberg report, the reason Apple ended-up in a settlement with Qualcomm was not necessarily because the company thought it was losing the legal battle, but because Intel was failing to deliver a competitive 5G chip on time. Intel's CEO disputed this in a recent Wall Street Journal interview, saying it only got out of the 5G market because Apple settled with Qualcomm.

Apple Feared Being Left Behind

Before Apple settled with Qualcomm, there were already some rumors that Intel will not be able to deliver its 5G modem to Apple for the 2020 iPhone, as the chipmaker had originally promised.

Apple, with some exceptions, has seldom been a company that adopts a brand new and unproven technology in its devices. It usually waits until the technology is mature enough to be ready for mass production and then it may add some refinements on top to outclass competitors.

However, the company also doesn’t want to fall too far behind the competition when offering some features, and it’s likely Apple believes that 5G support is going to be too important of a feature (at least marketing wise) to be more than a year or so behind compared to the competition.

Samsung, Apple’s main rival, has already released phones with Qualcomm’s 5G modem, and other competitors will follow suit later this year. Apple may not have been able to afford to wait until the second half of 2021 to adopt 5G technology, especially with recent reports of the company losing sales in multiple markets. The company said in January that its holiday revenue declined for the first time since the iPhone’s introduction in 2007.

Falling behind the competition may not be the only reason Apple can’t afford to wait on Intel to get its modem technology up to speed. The company has been focusing increasingly more on building its own services for the iPhone customer base, and some of those services require fast internet connections on iPhones and iPads.

Intel Blames Apple Settlement for Exiting 5G Market

Contrary to the Bloomberg report, Intel’s CEO Bob Swan said in an interview with the Wall Street Journal that it was Apple’s settlement with Qualcomm that forced the company to quit the 5G modem business:

“In light of the announcement of Apple and Qualcomm, we assessed the prospects for us to make money while delivering this technology for smartphones and concluded at the time that we just didn’t see a path.”

Intel has already invested billions of dollars into the 4G and 5G modem technology, so what the Intel CEO said doesn’t make much sense, unless Intel really had no business whatsoever without Apple as a customer.

It’s also possible Intel have only gotten Apple as a customer only because Apple didn’t want to deal with Qualcomm anymore, and not necessarily for its technology. If Intel’s 5G technology was up to par, then Intel should have easily found other smartphone makers that would be interested in it - for the right price.

The latter point may be important here because Intel doesn’t seem to do very well in any business that has a low dollar margin. Intel has already learned this the hard way in the smartphone chip market. Its Atom chip was never price-competitive without heavy subsidies from the company, making it lose billions of dollars every year. Some of its IoT attempts also haven’t fared so well, either.

This is why chances are that Intel never had a good enough product that couldn’t survive in the market unless it gained an ultra-rich customer such as Apple, willing to pay a premium to get away from a modem competitor (Qualcomm).