Apple, Qualcomm, Intel and the future of 5G

Last year, Apple sought to gain leverage over Qualcomm by hiring Intel to supply roughly half of the 4G chips in its iPhones.

By playing one company off the other, Apple hoped to keep its costs down. But with Intel out of the market, Apple no longer can count on that dynamic.

Nor can any other phone maker that must buy their 5G chips on the open market.

Intel had been struggling for years to build wireless chips that were as good as Qualcomm’s, analysts say.

On key metrics such as battery life and mobile data speeds, Qualcomm’s chips simply performed better.

“Generation after generation, Qualcomm has demonstrated they have an ability to develop products faster than their competitors,” said Walt Piecyk, an industry analyst at the research firm BTIG.

“Qualcomm has shown over the past 20 years their ability to make better products than not only their competitors, but also the attempts companies have made to build (chips) internally.”

Intel acknowledged its disadvantage in 5G chips in its announcement Tuesday.

“It has become apparent that there is no clear path to profitability and positive returns,” chief executive Bob Swan said in a statement.

Some have speculated that Apple, much as with Samsung and Huawei, could seek to design its own chips in the future — either to gain independence from Qualcomm or to compete head-to-head on wireless chips.

Several Apple job listings have suggested the company may be exploring that strategy.

But analysts said it can take years of investment and hard work to develop what can be purchased from other vendors in an instant.

The Chinese technology giant Huawei said this week it is open to selling its wireless chips to Apple.

But a number of analysts dismissed the offer as “trolling,” saying ongoing U.S. government concerns about the security of Huawei products — along with Apple’s privacy-conscious marketing — would make it challenging if not impossible for Apple CEO Tim Cook to accept.

“The political environment would make it difficult for Huawei to find their way into Apple’s phones, particularly given the focus that Tim Cook has placed on privacy,” said Piecyk.

For U.S. phone makers, few major vendors remain in the market for 5G chips. And they cannot afford to wait for another developer to come along, particularly when federal officials and wireless carriers are pushing rapid adoption of 5G as a national imperative.

“By late 2020 in the U.S., we will have nationwide 5G networks in the traditional (airwave) bands,” Entner said. “If you don’t have a good 5G phone (to sell), you’re in trouble.”