It has been three years since Apple acquired Intel’s baseband chip business in July 2019 and officially entered the research and development of 5G chips, but the research and development of 5G baseband chips may be more difficult than Apple’s expectations. Recently, Tianfeng International analyst Guo Mingji broke the news on Twitter, saying that the latest investigation believes that Apple’s self-developed iPhone 5G baseband chip development may have failed.
In this regard, Gartner analyst Sheng Linghai believes that it is too early to assess the failure of Apple’s 5G chip development. Apple has also not publicly acknowledged the failure of the 5G chip development project.
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Some market participants believe that compared with competitors such as Qualcomm, Apple entered 5G chips much later, lacking a first-mover advantage; and it faces challenges in the process of integrating Intel chip teams, resulting in serious personnel loss. The superposition of these factors may be a drag. Apple’s 5G chip research and development process.
Chip sector faces brain drain
In July 2019, Apple acquired Intel’s baseband chip business for $1 billion, and acquired related equipment from Intel’s baseband chip division, as well as 8,500 cellular and connected device patents, and 2,200 Intel employees.
After acquiring Intel-related businesses, Apple is still burning money. A senior person in the chip industry told Yicai.com: “Based on the average labor cost of a chip R&D engineer of $500,000, the annual salary cost of more than 2,000 employees exceeds $1 billion.”
But that’s not a huge amount for Apple, which spends more than $20 billion a year on research and development. “Funding is not a problem for Apple. The key is that Intel employees have too strong cultural genes in the past and can’t keep up with the pace of market development in the mobile field. It is not easy for Apple to change them.” The above-mentioned chip industry source told Yicai reporter, ” Apple originally hoped to make up for its shortcomings through this acquisition, but in fact Apple overestimated itself, and there have been some loss of personnel in the past two years.”
He said that he has familiar former Intel employees who left Apple’s baseband chip team and returned to Intel. “They think that working at Apple is too oppressive, and many people who used to be Intel can’t adapt.” He told the first financial reporter. Therefore, although Apple’s chip business has continued to expand globally in recent years, the loss of personnel in the 5G chip department is higher than normal.
The brain drain also means that Apple will have to wait longer to officially use its self-developed 5G chips. “Compared with Apple’s other self-developed chips, the baseband chip is a completely different type, and it is much more difficult, because it is very different from computer mobile phone chips in terms of communication functions, and Apple does not have this aspect. Gene.” The above-mentioned person told the First Financial Reporter.
He further explained that the research and development of 5G baseband chips is very difficult, because it involves not only 5G chips, but also 2G, 3G and 4G connections. At present, only a few manufacturers in the world can do it, such as Qualcomm and MediaTek.
Another Chinese company that has entered the baseband chip field in recent years, Aojie Technology, is also struggling. According to the search of the global patent database of Wisdom Buds, a reporter from China Business News found that Aojie Technology and its affiliates currently have more than 40 baseband-related patent applications, all of which are invention patents, of which more than 30 have been authorized. These patents mainly focus on related technical fields such as mobile terminals, radio access, receiving signals, and transmitters.
Qualcomm may continue to supply Apple exclusively
Sheng Linghai told the first financial reporter that there is no sign that Apple has stopped the research and development of 5G chips, and with the acquisition of Intel and other related companies, Apple still has a lot of patents, whether it can develop 5G chips is still inconclusive.
At present, it is widely expected that Apple may have difficulty launching 5G chips in 2023, and some analysts believe that this time point may be delayed to 2024. Ming-Chi Kuo predicts that Qualcomm will continue to be the exclusive supplier of 5G chips for the new iPhone in 2023.
Regarding this statement, Sheng Linghai said that there is no definite news that Qualcomm will occupy all the market for Apple’s baseband chips. Qualcomm told analysts last year that it expected to retain about 20 percent of its iPhone baseband chip business.
Retaining 100 percent of Qualcomm’s 5G chips in iPhones will add $4 billion to $6 billion in revenue for the year ending September 2024, according to forecasts by Bernstein analyst Stacy Rasgon. For this estimate, Qualcomm did not respond to the first financial reporter.
The above-mentioned chip industry veteran told the first financial reporter: “The price of Qualcomm’s baseband chip should be between 30 and 50 US dollars, and it may also need to be matched with supporting power management and Transceiver (rf360) chips. Qualcomm’s actual revenue growth is based on iPhone’s actual revenue growth. Annual sales can be estimated.”
Apple’s research and development in ARM-based chips has accelerated in recent years. More than two years ago, Apple announced that it would abandon Intel chips in favor of self-developed chips based on the ARM architecture. Since the first-generation chip M1 chip for Apple MacBook came out at the end of 2020, Apple has also announced at last month’s press conference. Released the MacBook equipped with the second-generation self-developed chip M2, which has stronger performance than M1, and the performance of CPU and GPU has been increased by 18% and 35% respectively.
Compared with baseband chips, the development speed of ARM chips is faster. Generally speaking, a generation can be developed in 3 years. “Using self-developed chips can help Apple better control costs.” Patrick Moorhead, founder of research institute Moor Insights, told Yicai.com.
In addition, since 2010, Apple has been building its own A-series chips for iPhones, iPads , and the Apple Watch. However, due to the increase in chip cost, the main models of the upcoming iPhone 14 series are said to not use the new A16 chip for the first time, but will continue to use the previous generation A15 chip, but in the iPhone 14 Pro, Apple may Using the new A16 chip.