At first, Apple and Qualcomm’s legal fight was merely petty “without me, you’re nothing” scuffling, but it has now evolved into something far more serious — with potentially damning consequences.
Apple And Qualcomm’s Legal Battle
Both companies are currently locked in an ugly legal battle over how the chipmaker charges for its components, which Apple uses to manufacture iPhones and iPads. Fast forward to now: Apple is reportedly dropping Qualcomm entirely for the next iPhone and iPad designs. Both these devices will no longer have any components from Qualcomm, and that’s a big deal.
Why Apple Is Dumping Qualcomm For Components
As The Wall Street Journal reports, Apple will instead rely on Intel or even MediaTek for components it used to get from Qualcomm, because the chipmaker allegedly withheld a piece of software critical to testing chips inside Apple’s iPhone and iPad prototypes.
According to one source, Qualcomm, who has been working for Apple for a decade, stopped sharing the said software in January after Apple filed a lawsuit accusing the chipmaker of using its market dominance to charge manufacturers steep patent royalties. Qualcomm rejects that claim, saying Apple is mischaracterizing its practices.
Next year, Apple is expected to look elsewhere for modem chips that are able to facilitate communication between devices and cellular networks. Qualcomm remains the biggest supplier of this chip type.
Modems that Apple plans to use in the next-generation iPhone and iPad “has already been fully tested and released to Apple,” according to Qualcomm, adding that it’s “committed to supporting Apple’s new devices” as it does to other manufacturers.
Qualcomm Better Brace Itself
This sounds like a simple “we don’t want you anymore” story, but it actually has bigger implications for the mobile landscape as a whole, thinks Huffington Post. iPhones are some of the best-selling devices in the world, and Qualcomm has been leading the mobile space for years. If Apple decides to get components from Intel or MediaTek instead of Qualcomm, that’s problematic.
Intel and MediaTek, while admirable in their individual fields, are not quite on par with Qualcomm just yet. Intel, especially, is merely a beginner in the mobile industry. That’s not to say both companies produce poor mobile components. They’re fine. But rarely is Apple associated with “fine.”
It’s also uncertain whether Intel or MediaTek can satisfy Apple’s overwhelming demand, especially for iPhones. Even Samsung can’t make enough OLED displays for the iPhone X. Granted, manufacturing network components is probably less difficult than producing displays, but it nevertheless implies that whichever company Apple ends up picking, it would need to find a way to cope with Apple’s bullish demand.
But plans to drop Qualcomm could still change, and the chipmaker better hope they do. Last year, it sold around $3.2 billion of modem chips to Apple, 20 percent of its overall chip sales, as per an estimate by Macquarie Capital. Chip sales to Apple this year are expected to hover around $2.1 billion. For Qualcomm, losing Apple would be a significant, potentially business-destroying gut punch.