Now that the dust has settled from Mobile World Congress 2018’s major 5G wireless announcements, two things are clear: 5G networks are coming even faster than recently expected, and based on its current relationships with 5G modem suppliers, Apple has a tough road ahead before it launches a 5G iPhone.
Being second or even tenth to market didn’t matter to Apple in 2007, when the first iPhone arrived without 3G network support, or in 2012, when the iPhone 5 shipped two years after early 4G networks. But a lot has changed since then. Apple is now the world’s #1 or #2 smartphone maker, depending on the quarter, and depends on iPhones for 1/2 to 2/3 of its revenues. Additionally, its current flagship phone arguably leads the industry in technology and sales. So if Apple decides to wait on 5G, which will certainly be 2019’s biggest new technology, it could simultaneously hurt its stock, market share, and reputation for innovation.
I’m not going to tell you what Apple is going to do, because that has become a Tim Cook-level business decision that may require Apple to work with a partner it doesn’t like. But I am going to outline the four roads Apple is going to choose from, and tell you which direction I think it’s most likely to take.
Road 1: Qualcomm
Normally, Qualcomm would be Apple’s most obvious 5G partner. Qualcomm’s modems have been inside iPhones for years, sometimes alone, and more recently alternating with Intel modems. The San Diego-based chipmaker has also been working on 5G technology for years, pushing to get 5G standardization completed early, and signing up dozens of 5G customers.
But Apple and Qualcomm are in the middle of a gigantic legal dispute over 4G patent payments, which has evolved from “largely about money” to “international antitrust battle” status over the past year. The dispute is currently serious enough that Apple has reportedly abandoned Qualcomm entirely for 2018’s new iPhone models, and has been actively working to remove Qualcomm parts from its product families. (That’s no easy task given the varying cellular needs of iPhones, iPads, and Apple Watches.)
So why is Qualcomm listed as Road 1? Disputes like this have a way of getting resolved when working together is necessary, and Qualcomm recently settled similar patent licensing issues with another major customer, Samsung. As discussed below, Apple might not have a better option for launching its first 5G phone, and settling with Qualcomm could make future device development a lot easier.
Road 2: Samsung
Conventional wisdom has it that Apple doesn’t really like Samsung — that, as years of lawsuits have established, Apple sees the Korean company as a knock-off artist that made its name trading on obviously copied Apple innovations. Yet Samsung components are inside many Apple devices — sometimes screens, sometimes chips, and yes, sometimes even ideas. Apple’s latest flagship phone, the iPhone X, depended 100% on Samsung for its Super Retina display, as rival screen maker LG reportedly couldn’t meet Apple’s quality requirements.
Samsung is already publicly working on 5G devices, having revealed prototype tablets earlier this month, and the Galaxy S10 will almost certainly be 5G-capable. Not surprisingly, Samsung makes 5G modems, too, now including CDMA support, as well as hardware that can be used to provide an entire home with 5G wireless services, including optimized performance for Samsung phones.
That’s either bad news for Apple, which recently exited the wireless router business and won’t get Apple-specific optimizations, or a great opportunity for Apple to get friendlier with its key Korean supplier. All things considered, I’d call Samsung a dark horse possibility at best — it’s hard to imagine Apple swallowing its pride at this point and relying upon another Samsung solution for a key iPhone feature, but given its current legal situation with Qualcomm, it mightn’t have another practical choice.
Road 3: Intel
Intel is listed as Road 3 for Apple, but it could easily become Apple’s 5G partner in one of two situations: if Intel’s 5G modem development is going better than is publicly known, or if Apple is willing to wait past the first generation of 5G devices. Either is a possibility.
In the 4G era, Intel modems have lagged enough behind Qualcomm’s that Apple felt compelled to slow down the Qualcomm chips in some iPhones to perform comparably to Intel modems found in other iPhones. Without detailed specs for Intel’s upcoming XMM8000 series of 5G modems, many people are assuming — perhaps incorrectly — that Intel will again struggle to match Qualcomm’s performance.
The big question right now is whether Intel will have any smartphone-ready 5G modem available in 2019. This week, Intel said only that it will have laptop-ready modems available by late 2019 — a long time to wait — and unlike rivals that are already producing early chips, Intel might just miss the entirety of 2019 for phones. Certainly, Apple and Intel know more than they’ve publicly said on this topic, but the lack of any 5G phone announcement from Intel at a show as big as MWC suggests that Apple will need to pick another path.
A Road Not Taken: Huawei
Without spending too many words on this point, it’s fair to say that even though Huawei announced the first commercially available 5G chipset this week, Apple’s not going to touch it.
Because of its relationship with the Chinese government, Huawei’s been under investigation by the U.S. government for the entire 4G generation, and has been deliberately frozen out of 5G planning in the U.S. — Australia is likely to be next. Many other companies appear set to use Huawei parts, but Apple won’t use any components that would lock it out of selling phones in its home market.
Road 4: Apple
The last road — and one I’m not going to put much faith in for the time being — is Apple having its own 5G modem ready to go next year. It’s widely known that Apple is actively working on wireless chip development, and Apple-designed W-series chips have already appeared in the Apple Watch, AirPods, and Beats headphones.
However, a full modem would be a big step forward for Apple, and a 5G modem is all but unthinkable right now. As much as Apple would probably love to own this particular component in its devices, 5G is so hugely complicated from an engineering and testing standpoint that I can’t see Apple going its own way with the first 5G iPhone. 2020? 2021? Maybe.
One of the issues is antenna design. Qualcomm clued journalists into this ahead of MWC, noting that 5G device makers will need to find ways to keep multiple antennas accessible, lest data speeds drop dramatically. In an effort to address this for particularly reception-challenged 5G millimeter wave modems, Intel’s laptop solution at MWC was a pair of huge kickstands designed to serve as antennas. Apple would never be OK with a solution like that, but it’s going to need to engineer and test something smarter on its own.
Which road will Apple take?
It’s easy to conclude that Apple will likely rely on Qualcomm, Samsung, or Intel for its first (and maybe even its second) 5G iPhones, then switch to its own modem whenever it’s confident in its network compatibility and performance. But that conclusion leaves two key questions: which company will be its first 5G modem supplier, and when?
If I had to pick just one of these companies as Apple’s most likely partner, it would come down to a choice between Intel and Qualcomm, with Qualcomm in the lead based solely on today’s publicly available information. Despite Intel’s widely-publicized 5G displays at sporting events, the fact that it hasn’t announced smartphone deals suggests that it has probably fallen behind its rivals in some key way. For Apple, that means either waiting for Intel, or choosing between Qualcomm and Samsung. Its dispute with Qualcomm is over money, versus Samsung, which it still deals with despite issues with both money and copying. Settling the lawsuit with Qualcomm would give Apple immediate access to 5G chips, and hence, the ability to launch a 5G iPhone.
There’s always the possibility that Apple could sit out the first generation of 5G devices — and obviously, there’s precedent for that with 3G and 4G. I think the stakes for Apple are too high at this point, but if the company’s willing to risk sales, its reputation, and its stock price, it could be 2020 before we see the first 5G iPhone. If so, the market for premium 5G smartphones will be Samsung’s to lose.