Apple’s forecast purchase of Intel’s modem division could be a genius move that could reinvigorate its plateauing iPhone-line, according to industry experts.
News that tech heavyweight Apple is planning to buy Intel’s modem division broke earlier in July. It followed a formal announcement by Intel that it would leave the 5G modem business in April.
At the time, this was thought to be a big blow to Apple, which bought and used the Intel’s modems in its iPhones. According to industry speculation it’s also a key reason the company chose to bury the hatchet with arch-rival Qualcomm, which is currently the biggest 5G modem manufacturer.
At first glance, this makes Apple’s purchase of Intel’s modem business feel a little odd – why would Apple need it when it can trade with Qualcomm, which has more advanced, function 5G modems ready to go? However, industry experts suggest the move could have wider, positive, implications for future iPhones.
Speaking to Trusted Reviews, Kantar global director Dominic Sunnebo said it is likely part of a wider push by Apple to reduce its reliance on external manufacturers.
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“Having just settled a long running dispute with Qualcomm, on the surface it seems somewhat counter-intuitive that Apple is rumoured to be in talks to buyout Intel’s modem business,” he said.
“However, it fits into a longer-term pattern that Apple increasingly wishes to bring component development and manufacturing capability in house, reducing reliance on current partners, and sometimes rivals.”
IDC research manager, Marta Pinto, was similarly positive about the purchase, highlighting the success competitors, like Samsung and Huawei, have had taking similar strategies.
“Smartphone manufacturers building chipsets is not new: Samsung and Huawei are well known for doing it. The biggest advantage is actually a technological one: the manufacturer is able to control more closely how the electronics are built and therefore come up with a super performer device. It is a matter of optimizing the device to all components,” she said.
“Also by building a chipset in-house, Apple will be able to bring some differentiation to the market as it can adapt the device to whatever innovative feature it wants to introduce without having to build on top of other’s platforms. So in terms of innovation, this is also good news both for consumers and investors.”
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Apple already creates its own iPhone and iPad A-series CPUs for the reasons highlighted by Pinto.
The IDC researcher added that, in the long-term, the purchase could also help Apple overcome on of the iPhone’s biggest stumbling blocks: its hefty upfront cost.
“Bringing production in-house does not mean lower costs per se. Raw materials continue to be pricey as well as developments,” said Pinto.
“On the other hand […] avoiding the costs of securing licensing agreements, the price of having contingency plans – more stock in advance for example – or even the financial impact of not being able to come up with an optimum device, and consequently loss of market share, clearly cuts costs in the long run.”
Sales forecasts suggest sales of top-end smartphones are plateauing as users are waiting longer before upgrading their phones. Kantar’s latest mobile sales report suggested this is a key reason iOS devices saw a 0.8% sales decline in Europe and 2.4% drop in the US by comparison over the last quarter.
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Despite the long term positive benefits, both experts suggested the purchase will have no immediate impact on Apple’s next iPhone, the hotly rumoured iPhone 11.
Sunnebo highlighted past reports suggesting Intel’s existing 5G modems hadn’t met Apple’s requirements as proof.
“Whilst the reason for Intel looking to exit the model business is not confirmed, it is widely understood to be because their 5G modem development was behind that of rivals and not scheduled to be ready to meet Apple’s requirements. This suggests the mooted takeover will have no immediate impact on iPhone users,” he said.
5G is a new generation networking technology that aims to offer users gigabit-per-second connection speeds. EE and Vodafone have live 5G networks in select UK locations. O2 announced it will launch its 5G network in October in select locations earlier this week.