5G Modem Chip and Apple
The modem chip market has long been under the dominating influence of Qualcomm, a company known for its technological prowess in the field. However, Apple, a tech giant in its own right, has made significant efforts to achieve “independent development” of modem chips, seeking to reduce its reliance on external suppliers. Despite its determined endeavors, Apple has encountered challenges and setbacks, which have dented its pride as a company renowned for innovation and self-sufficiency.
The highly competitive nature of the modem chip market, with Qualcomm’s stronghold, has made Apple’s pursuit of autonomy in this sector a formidable task. Nevertheless, it remains an intriguing narrative in the world of technology as Apple continues to strive for self-reliance.
The Modem – I’m Not Easy
Samsung’s statement underscores the evolving nature of the term “modem” in the context of technology. Initially, modems encompassed a wide range, including the dial-up versions that connected 1990s PCs to the Internet, wired communication modems like DSL and cable, as well as wireless communication modems used for cellular service and Wi-Fi. However, in the contemporary mobile industry, the term “modem” predominantly pertains to cellular modems optimized for wireless communication, particularly those supporting advanced standards like LTE and 5G.
Apple, a company renowned for its innovation and technological advancements, faces certain challenges in the domain of 5G modem chip development. Apple has embarked on an ambitious journey to create its proprietary version for over half a decade. However, despite their rigorous efforts, Apple has not yet attained their goal in this endeavor.
This highlights the complexity and intricacy of modem chip development, where even a tech giant like Apple encounters hurdles that are not easily overcome. Nonetheless, Apple’s ongoing pursuit of this goal signifies their commitment to self-reliance and staying at the forefront of mobile technology.
Qualcomm – The Dominance
The foremost company in this field is Qualcomm, based in the United States. As evident from its name, “Qualcomm,” which stands for “Quality Communications,” the company has been dedicated to the development of communication semiconductors, with a primary focus on modems and RF chips since its inception in 1985. The bulk of its revenue is derived from chip sales, patent licensing, and royalties. For the fiscal year 2023, spanning from October 2022 to September 2023, Qualcomm is projected to achieve substantial sales, estimated at $35.68 billion, underscoring its dominant position in the industry.
Up until the mid-2010s, Apple had been utilizing Qualcomm’s modem chips in its iPhones. However, between 2015 and 2017, international competition authorities, including the Fair Trade Commission in various countries, launched investigations into Qualcomm’s patent policies, which were viewed as an “abuse of market dominant position.” During this period, Apple found itself at odds with Qualcomm, leading to the termination of their business arrangement. In place of Qualcomm, Apple turned to Intel for modem chips. Subsequently, in 2018, Apple embarked on its independent modem chip development journey.
Intel Can’t Help
However, this venture didn’t unfold as smoothly as envisioned. Around 2019, Apple encountered difficulties in launching 5G smartphones due to challenges in modem chip development. Intel, their modem chip supplier, faced its own set of issues and was unable to release a 5G modem chip, further complicating matters. As a result, Apple initiated negotiations with Qualcomm for the supply of 5G modem chips, but these discussions encountered obstacles, underscoring the intricate dynamics of the mobile technology industry.
Samsung: “I have, but I won’t give.” | Back to Qualcomm
During this period, Apple’s competitor, Samsung Electronics, made a significant stride by introducing the world’s inaugural 5G smartphone in April 2019. This achievement was attributed to Samsung Electronics’ successful development of its proprietary 5G modem chip. In an attempt to secure 5G modem chips for its own devices, Apple reached out to Samsung Electronics, but the latter displayed hesitation, citing insufficiency in their supply capacity. Ultimately, Apple had to set aside its pride and turned to Qualcomm, a company it had previously competed with, to procure 5G modem chips, highlighting the complex dynamics and intense competition within the industry.
Apple’s Efforts for Their Own 5G Modem Chip
As of 2023, Apple’s quest for independence in modem chip development has yet to yield the desired results. In a noteworthy move back in July 2019, Apple acquired Intel’s smartphone modem division for a substantial $1 billion, demonstrating its commitment to gaining a foothold in this domain. Furthermore, Apple made endeavors to attract talent from Qualcomm, a prominent player in the industry. The ambitious goal was to achieve “modem chip independence by 2023.” The Wall Street Journal (WSJ) revealed that Apple’s internal project for modem chip development goes by the name ‘Sinope,’ drawing inspiration from Greek mythology where Sinope is a clever goddess known for eluding Zeus.
Continuing with Qualcomm
Regrettably, the Sinope project has faced significant challenges and has not yet resulted in Apple’s ability to independently create a 5G modem chip. This fact was underscored by Apple’s recent decision to extend its contract for the supply of ‘5G modem chips’ from Qualcomm, spanning until 2026. Qualcomm officially announced this agreement last month, causing its stock price to rise continuously over four consecutive days from the 11th to the 14th, highlighting the significance of this collaboration in the highly competitive tech industry.
Modem – I’m Not AP
Modem chip development is often likened to “reaching for the stars in the sky,” a formidable task in the realm of technology. Apple has earned acclaim for its remarkable expertise in semiconductor development, notably through the successful creation of its own application processors (APs), which serve as the brains of their smartphones. Apple’s APs, including the A15, A16, and A17, are widely recognized as among the best in the world, competing favorably with Qualcomm’s Snapdragon APs.
However, Apple’s endeavors in modem chip development have sparked surprise and scrutiny. Analysts attribute this to the vastly more intricate nature of modem chip development compared to APs. As one semiconductor industry official explained, while APs can be constructed based on established design assets (IP) from entities like the British company ARM, but modem chips cannot. They require a depth of knowledge and expertise that isn’t easily replicated, especially when measured against the 40 years of accumulated wisdom held by specialists like Qualcomm in the field of modem chip development. This contrast underscores the unique difficulties associated with achieving autonomy in this specific aspect of semiconductor technology.
5G Modem Chip – The Challenges
Another significant challenge in modem chip development is the necessity to accommodate a broad spectrum of communication standards, including 3G and 4G, in addition to the latest 5G technology. Even contemporary 5G smartphones continue to rely on 4G for certain mobile communications, and 4G remains a primary communication standard in many automotive systems. As one industry official pointed out, crafting a 5G modem chip of the highest caliber is only part of the equation. It’s equally crucial to ensure backward compatibility with 3G and 4G, a complex task that demands extensive knowledge and expertise accumulated over time.
Can’t run away from Qualcomm.
While Apple is renowned for crafting custom semiconductors tailored to its mobile devices, it faces the inherent challenge of designing these chips without infringing upon communication patents held by companies like Qualcomm. This inescapable fact underscores Apple’s reliance on Qualcomm to some extent. It also sheds light on why many communication chip developers ultimately enter into licensing and royalty agreements with Qualcomm. Some analysts argue that Apple’s past success in AP development might have led to underestimating the complexities of modem chip development, leading to an initial underestimation of the challenges involved.
Samsung 5G Modem
Samsung Electronics’ position in the realm of modem chip development differs slightly from that of Apple. Within the company’s System LSI Division, Samsung independently undertakes the development and distribution of 5G modem chips. Notably, the Exynos Modem 5300, crafted using a cutting-edge 4-nanometer (nm) process, stands as a flagship product, offering impressive download speeds of up to 10Gbps and upload speeds of up to 3.87Gbps. This advanced modem chip finds its place in the latest smartphone models, reinforcing Samsung Electronics’ commitment to cutting-edge technology.
Nevertheless, Samsung Electronics still maintains a connection to Qualcomm, marked by a mutual patent exchange agreement (cross-license) and associated royalty payments. Despite this, Samsung Electronics, in addition to Taiwan’s MediaTek, is often regarded as one of the few viable alternatives to Qualcomm in the market. Previously, relations between Samsung and Qualcomm faced scrutiny, but it is reported that the two companies have now reached more reasonable contract terms, following the Fair Trade Commission’s investigation in 2017. This development reflects the evolving dynamics and competition within the semiconductor and communication chip industry.
Samsung’s latest work
Recently, Samsung Electronics introduced an innovative 5G modem chip during the ‘System LSI Tech Day‘ held in Silicon Valley, USA on October 5th. Collaborating with Skylo Technologies, they unveiled the ‘next-generation 5G modem’ with a distinctive feature: seamless, wide-ranging coverage and versatile design flexibility, integrating a non-terrestrial network (NTN) solution into a single chip.
Non-terrestrial network technology (satellite connectivity) is highly regarded for its utility in emergency scenarios, and Samsung Electronics demonstrated its potential by showcasing a video at the Tech Day event. The video depicted the use of a modem chip to connect to a satellite, enabling two-way text communication in areas lacking mobile phone service, highlighting its significance for rescue operations.
Ambitious 5G Modem Chip Pursuit by Apple
The development of a 5G modem chip is indeed a formidable undertaking, fraught with numerous complexities and challenges. However, it’s important to note that while it’s not an easy feat, it is by no means impossible. Apple, a company renowned for its innovative spirit and relentless pursuit of excellence, remains undaunted by these challenges. With a resolute commitment to overcoming obstacles, it is only a matter of time before Apple realizes its aspiration of creating its proprietary 5G modem. The company’s unwavering determination, coupled with its history of groundbreaking technological achievements, suggests that this ambitious goal is well within reach.