Qualcomm shows Apple’s modem transition is almost complete

06/08 04:15 - Qualcomm shows Apple’s modem transition is almost complete
Apple may be moving faster than expected in its modem development work, and Qualcomm’s latest comments suggest that shift is already reshaping the iPhone supply chain.  Qualcomm overnight said supply constraints are shrinking some of its Apple business faster than anticipated. “It’s availability of supply,” CEO Cristiano Amon told Reuters. While he wasn’t specific, that likely reflects the broader industry shortage in memory, storage, and everything else and means the company’s share of components used for the next iPhone launch will fall “well below” its anticipated estimates. Amon says this is part of a transition in which future Qualcomm income will be generated by AI datacenter demand. The company also intends to boost modem prices on Sept. 1 (And remember, the patent licensing agreement between Apple and Qualcomm expires in March 2027.) Given Apple is selling plenty of smartphones (even as the broader industry shrinks), supply constraints won’t necessarily be because of demand for the devices; this could reflect Apple’s plan to divide the iPhone release schedule across several months, as well as its future modem development efforts.  Reports for months have indicated Apple plans to introduce new iPhones twice a year, with the Pro range updated each fall and entry-level devices scheduled for spring. It’s a move that’s likely to help build more consistent quarterly earnings by spreading demand across different parts of the year and could reduce short-term demand for components. Things look a little different this year, of course; the expected introduction of the new iPhone Ultra means Apple will be making three new iPhone models, not the customary four – though there is also speculation the Ultra may not ship in quantity until later on this year.  How much does Apple need Qualcomm? Not much There’s also Apple’s own modem development plans to consider. We know Apple’s relationship with Qualcomm isn’t easy. The two firms were engaged in costly litigation before they found a way to bury the hatchet and work together on 5G iPhones while Apple developed its C-series modems. Those C-series modems are already used in Apple devices. The iPhone 16e, 17e and iPhone Air carry Apple’s C1/C1X modem, with the C2 variant expected in the 18 Pro series this year.  Apple’s new modem is expected to deliver better battery efficiency, improved cellular network privacy, and AI-supported network efficiency. So, your device should last longer, be less visible to your carrier, and better able to get a connection — even when connectivity is constrained.  Next year’s 18-series devices will certainly stick with Apple’s modems, meaning Qualcomm’s remaining Apple business should be wrapped up in the release this fall. As Apple’s modem appears in more devices, you’ll probably only see Qualcomm modems used to provide mmWave support, which realistically has very little traction or carrier support outside America. Waiting to replace mmWave That view is supported by reports based on information recently stolen from Apple’s India-based iPhone partner, Tata. It claimed Apple will use the C2 in internationally sold iPhones Pro and Max, while keeping to Qualcomm in US devices. If Apple takes the same approach with next year’s iPhone releases, it would mean only US iPhones — and probably not all of them — have mmWave. As a result, Qualcomm’s modems will only be available in a very small subset of iPhones sold. That would almost certainly account for the modem maker’s reduced Apple optimism. (Apple is also part of the 6G standard development group, which implies it hopes to find some way to replace mmWave.) It also indicates Apple is less likely to renew its current patent licensing deal, though it could still require some licenses since Qualcomm’s SEPs include some 5G-essential technologies. The other takeaway here: Apple has a high degree of confidence in its forthcoming C2 modem, which makes sense given how well-received its C1 modem has been.  A clean sweep One more thought. It is interesting the extent to which Tim Cook’s Apple seems to be finalizing much of its business before the transition to new CEO John Ternus on Sept. 1. (It is also notable that Qualcomm also intends to raise its prices on the same date.) You can follow me on social media! Join me on BlueSky,  LinkedIn, Mastodon and subscribe to The Core. ...