(Image credit: Intel) Intel announced today that it is no longer competing in the 5G modem market for smartphones. The company says it will evaluate the options for the remainder of its 4G and 5G modems in PCs, IoT, and other devices outside of smartphones, but will refocus its 5G efforts on the ‘cloudification’ of the network. This news comes as Apple, by far Intel’s largest modem customer, and Qualcomm settled their multi-year dispute over modem licensing. Intel's 4G discrete modem product line is unaffected. As a result of the decision, Intel stated it would no longer fulfill its previous commitments for 5G modems in the smartphone space that it had planned for 2020. In November, Intel had announced its intention to get 5G into commercial devices in early 2020 with its second-gen XMM 8160 5G modem. The announcement does not mean that Intel has completely abandoned the 5G modem business or modem development, as Intel specifically referred to the smartphone space. For the time being, Intel said it would assess opportunities to put its discrete modems in other devices. So, what this announcement means for the launch and timeline of the XMM 8160, and whether there will be any Intel 5G product launches in 2020, is unclear. Intel had previously hinted that Project Athena laptops could include 5G connectivity in the future. (Image credit: Intel) In the past, Intel prided itself as being the only company that can provide an end-to-end 5G solution. Instead, Intel will continue to focus on the ‘cloudification’ of the network from the cloud to the network edge. This refers to using standard Xeon Scalable CPUs as the network continues the ongoing transition to network function virtualization (NFV) and software defined networking (SDN). Both terms basically refer to CPUs carrying out the network operations instead of ASICs or ASSPs. Using standard CPUs lowers the cost for communication service providers. The networking infrastructure market is worth about $20B, which is quite a bit larger than the discrete Apple modem business. Intel had zero market share in this market about half a decade ago, but the company saw significant growth in this market as communication service providers began preparing for 5G, ultimately reaching over 20% market share last year. At CES, Intel announced it was also entering the base station market. Intel expects to capture 40% of that market by 2023 with its 10nm Snow Ridge product. Summing up this decision, Intel CEO Bob Swan said: “We are very excited about the opportunity in 5G and the ‘cloudification’ of the network, but in the smartphone modem business it has become apparent that there is no clear path to profitability and positive returns. 5G continues to be a strategic priority across Intel, and our team has developed a valuable portfolio of wireless products and intellectual property. We are assessing our options to realize the value we have created, including the opportunities in a wide variety of data-centric platforms and devices in a 5G world.” Intel stated its 4G portfolio is unaffected by this decision. The company began shipping the XMM 7560 modem last year (its first gigabit LTE modem and also the first modem built on its own in-house 14nm process) that will likely make it into this year’s iPhones. Intel also stated it would provide more details during its earnings call for the first quarter of 2019 (scheduled for April 25). Apple And Qualcomm Intel’s announcement came off the back of Qualcomm and Apple settling their 4G licensing dispute, as we reported earlier today. (Image credit: Apple) That settlement included, among other things, an agreement to a multi-year Qualcomm chipset supply agreement with Apple. When that news came in, it become apparent that Intel would lose market share in the iPhone, since it had became the sole modem provider for Apple’s 2018 iPhones. While Qualcomm hadn’t reported any specifics, the information the company provided suggested that it had taken the majority, if not all, of the iPhone modem supply back from Intel. With Intel losing its only major modem customer, it was only a matter of time before it exited that market. It's unknown if Apple and Qualcomm made this agreement because Intel decided to exit the modem business (in which case Intel will likely stop all 5G modem development), or if Intel was forced to this 'decision' because Apple and Qualcomm reached an agreement. Intel’s Road To 5G (Image credit: Intel) Intel announced its 5G XMM 8000-series multimode modem portfolio in late 2017, with the XMM 8060 being the first product in the family. At CES last year, Intel announced it would target mid-2019 availability, with both 5G laptops and smartphones launching in the second half of 2019. For the latter market, Intel announced a partnership with Unigroup Spreadtrum to bring 5G to the Chinese smartphone market, but reports emerged earlier this year that the partnership had ended. (Image credit: Intel) However, Intel changed those plans in November 2018. The company made the decision not to commercialize the XMM 8060 (it was rumored to have power consumption and heat issues), relegating it to a development platform. Instead, Intel announced its successor, the XMM 8160, would be available in the second half of 2019 with products in the market in early 2020, representing a pull-in of over half a year. At the time, Intel said those commercial devices would include smartphones, PCs, and broadband access gateways. As things stand, today’s announcement removes ‘only’ the smartphone category from the portfolio of 5G devices that Intel targets, and not all of its 5G modem efforts. Intel always faced a big hurdle in this market because virtually all players have their own modem IP and have integrated it into their SoCs, hence removing the need for discrete solutions such as Intel's. Apple was a major exception to that; as a result, Intel's modem business' revenue grew to somewhere in the neighborhood of $1B in the last quarter of 2018. We should learn to what extent Intel is planning to continue (or not) developing its 5G modem family when the company reports its first quarter results later this month.<doc-sep>Yes, the major public clouds offer a lot. But what you may not know are the limitations, and how open clouds make the difference. Elevate your enterprise data technology and strategy at Transform 2021. Following Apple’s last-minute patent licensing settlement with Qualcomm today, Intel has unexpectedly dropped out of the 5G modem-making business for smartphones. The Santa Clara-based chipmaker says it is in the process of assessing its remaining modem-related opportunities for PCs, internet of things devices, and data-focused devices, but it intends to continue making 5G network infrastructure components. Intel CEO Bob Swan suggested that the company couldn’t compete “in the smartphone modem business,” saying “it has become apparent that there is no clear path to profitability and positive returns.” But he called 5G “a strategic priority” across the company and said Intel is reviewing the options for its wireless products and intellectual property — a signal that it may be looking to sell its portfolio. As Intel already sells 4G modems, the company says it will continue to provide those products to customers, but it does not intend to produce 5G modems for smartphones. The continuation of its existing 4G modem business will enable companies such as Apple to continue producing existing and scheduled products with Intel chips as they begin to transition to competing products. Today’s announcement brings an abrupt end to widespread industry speculation regarding Intel’s ability to serve as a supplier of 5G modems for Apple. Less than two weeks ago, Intel rebuffed a report that it was facing new problems in its 5G modem development program, calling into question a single-sourced claim that missed milestones were imperiling its supply prospects with Apple. At the time, Intel told VentureBeat that it still planned “to support customer device launches in 2020 with its XMM 8160 5G multimode modem.” However, the company’s passive denial mirrored a similar situation in 2018, when it shrugged off a report of troubles with its XMM 8060 modem, only to later drop the project in favor of its now-cancelled sequel. Intel’s modem-making rival Qualcomm had accused the company of conspiring with Apple to undermine its business, claiming that Apple had shared secret and proprietary Qualcomm information to accelerate Intel’s competitiveness in the modem space. Since Qualcomm’s 4G modems routinely outperformed Intel’s in speed and yet Apple used separate modems across different iPhone carriers and regions, Apple held back the top speeds of Qualcomm parts so that devices made with Intel modems would deliver similar performance. 5G added all new levels of complexity to the modem engineering process. While Qualcomm is already working on its third commercial 5G modem, Intel reportedly faced power efficiency and cooling challenges with its first and second 5G modems. Additionally, the use of millimeter wave, sub-6 GHz, and lower-frequency radios in 5G devices make both individual and multiple antenna designs incredibly challenging. In recent months, the company clearly began to focus on 5G networking components that wouldn’t be as thermally constrained as smartphone chips, while saying little about its relationship with Apple. Apart from a plan to sell iPhone modems, Intel’s most noteworthy 5G deal was with T-Mobile to supply unspecified low-frequency 600MHz components to the “Uncarrier.” Intel’s exit from the 5G smartphone modem business leaves only four players in serious contention: Qualcomm, which holds the vast majority of 5G modem contracts; Galaxy phone maker Samsung; Chinese telecom giant Huawei; and smaller Taiwanese budget chipset maker MediaTek. While Apple has recently emerged as a potential modem maker, the company’s settlement with Qualcomm today included a six-year chip sourcing agreement plus a two-year extension option, suggesting that Apple likely won’t be ready to fully meet its own needs for at least half a decade.<doc-sep>Intel Corp., whose products dominate the world of computing, said it’s going to wind down a multibillion-dollar, multidecade effort to grab a viable stake of the mobile phone industry. After its one significant customer, Apple Inc., said it will return to using Qualcomm Inc. chips, Intel announced Tuesday it will exit the 5G smartphone business and complete an assessment of the opportunities for existing chips and fifth-generation modems in personal computers. “The company will continue to meet current customer commitments for its existing 4G smartphone modem product line, but does not expect to launch 5G modem products in the smartphone space, including those originally planned for launches in 2020,” the Santa Clara, California-based company said in a statement. Intel Chief Executive Officer Bob Swan, who stepped up from the chief financial officer role in January, is stopping an effort that his predecessors poured billions of dollars into over the years. With Apple as an exclusive customer, Intel still has struggled to make money in modem chips, even as its position in other markets has fueled revenue and profit growth. Swan said the new fifth-generation wireless systems will provide an opportunity for Intel to sell more chips for networking use, rather than in phones. “In the smartphone modem business it has become apparent that there is no clear path to profitability and positive returns,” Swan said in the statement. Analysts had speculated that the ascension of a leader from a financial background to Intel’s top job would prompt a reassessment of some business units that haven’t delivered. Intel has struggled to win customers as the phone market eclipsed the personal computer industry in volume, and smartphones became more like computers. Before combining the mobile business into its PC chip division, the company reported billion-dollar losses as it paid out subsidies to try to woo phone and tablet makers.<doc-sep>Intel Intel will no longer be working on 5G chips for phones, leaving Apple with only one supplier for its iPhones, Qualcomm -- the same company that it was battling in court until midday Tuesday. Intel late Tuesday said it plans to cease working on modems for 5G, the next-generation of wireless technology expected to supercharge your mobile connection. It had been working on a processor for Apple, with the chip expected to be in iPhones in 2020. Lately there have been worries the chip wouldn't be ready until iPhones released in 2021. "The company will continue to meet current customer commitments for its existing 4G smartphone modem product line, but does not expect to launch 5G modem products in the smartphone space, including those originally planned for launches in 2020," Intel said in a press release. Its only customer in modems is Apple. Now playing: Watch this: We tested Verizon's new 5G network The announcement follows news from earlier Tuesday that Apple and Qualcomm had reached a settlement in their battling over licensing royalties. The two sides announced the surprise agreement through a joint press release Tuesday at the same time lawyers presented opening arguments in a courthouse in Southern California. Apple and its contract manufacturers had given their statements, and Qualcomm's head lawyer had nearly finished his remarks when the courtroom buzzed with the unexpected news. In a statement, Intel added that it will "complete an assessment of the opportunities for 4G and 5G modems in PCs, internet of things devices and other data-centric devices." It also said it will "continue to invest in its 5G network infrastructure business." "We are very excited about the opportunity in 5G and the 'cloudification' of the network, but in the smartphone modem business it has become apparent that there is no clear path to profitability and positive returns," Intel CEO Bob Swan said in a statement. Apple vs. Qualcomm The writing was on the wall after Apple and Qualcomm settled, ending the two-year battle. Apple in January 2017 had accused Qualcomm of anticompetitive practices that have raised chip prices, restricted competition and hurt customer choice. Qualcomm, the world's biggest mobile chipmaker, had countered that the iPhone wouldn't be possible without its technology, and it deserved to be paid for its innovation. The settlement marks a big win for Qualcomm, which could have been forced to change its entire business model had it lost to Apple. The agreement is also a victory for consumers, who will once again have access to fast Qualcomm modems -- including ones already compatible with existing 5G networks. "With the market for 5G accelerating, the need to guarantee a 5G iPhone in 2020 clearly proved a powerful motivator for a settlement," CCS Insights analyst Geoff Blaber said. "Commercial pragmatism ultimately won." But with Intel exiting the 5G modem business, Apple is once again left with only one modem supplier, Qualcomm. Apple makes its own applications processor -- the brains of the iPhone -- but it relies on third-party chips for network connectivity. From the iPhone 4S in 2011 to the iPhone 6S and 6S Plus in 2015, the sole supplier for those chips was Qualcomm. The following year, Apple started using Intel modems in some models of the iPhone 7 and 7 Plus, but it still used Qualcomm in versions for Verizon and Sprint. It continued that trend in 2017, but Apple's latest phones -- the iPhone XS, XS Max and XR, now only use Intel 4G chips. Apple blamed Qualcomm, but now that the two companies have settled their patent disputes, Qualcomm will again provide chips for Apple. For Apple, it's likely too late to use Qualcomm chips in its iPhones coming later this year. But it's believed the iPhones in 2020 will have Qualcomm's 5G modems. It's expected that every major flagship Android phone by the end of this year will have 5G. An Intel spokesman declined to say if Intel planned to exit the business before the settlement or because of the new agreement between Apple and Qualcomm. Investors seemed to approve of Intel's decision. Shares in the chipmaker jumped almost 4% to $58.97 in after-hours trading. "Without Apple, Intel's phone modem business is bereft of options," said Charles King, an analyst with Pund-IT. "The settlement and licensing agreement left Intel without a clear way forward in handsets. The company is really better off focusing its energies and investments on 5G infrastructure and data center solutions." Originally published April 16, 4:39 p.m. PT. Updates, 5:09 p.m.: Adds Apple vs. Qualcomm details and other background; 5:23 p.m.: Adds analyst comment; 5:32 p.m.: Adds Intel share price; 6:33 p.m.: Adds analyst comment.<doc-sep>
Intel is abandoning plans to build 5G modems for smartphones after it reportedly missed a number of deadlines for development of a chip that would have powered the first next generation iPhone next year. Apple was apparently so concerned about delays to the XMM 8160 5G modem chip that it was considering alternative suppliers. Court records showed it had explored the possibility of using Samsung and MediaTek components, while Huawei had thrown its hat into the ring. Now it is confirmed Apple will have to find another supplier for 5G. Intel says it will continue to meet customer commitments for 4G smartphones, such as the iPhone, but does not expect to launch any 5G smartphone products – including those it had planned to launch in 2020. Intel 5G modems Intel Bob Swan added that the company would conduct an assessment of the opportunities for 4G and 5G modems in PCs, IoT and other devices and would continue to invest in 5G infrastructure. “We are very excited about the opportunity in 5G and the ‘cloudification’ of the network, but in the smartphone modem business it has become apparent that there is no clear path to profitability and positive returns,” he said. “5G continues to be a strategic priority across Intel, and our team has developed a valuable portfolio of wireless products and intellectual property. We are assessing our options to realize the value we have created, including the opportunities in a wide variety of data-centric platforms and devices in a 5G world.” Intel had fought hard to win Apple’s modem business, even agreeing to terms which meant the iPhone manufacturer had to prioritised over other customers. Qualcomm’s modem technology has been used in several iterations of the iPhone, but since the iPhone 7, Apple has diversified its supplier base, using Intel chips in some handsets. Qualcomm believes its modems have been completely eliminated from the most recent iPhones, a belief that is supported by independent teardowns. This led to a series of legal battles in which Qualcomm claimed Apple violated its patents, while Apple says the Snapdragon chipmaker is abusing its dominant position in the market and charging extortionate fees. But in a surprising parallel development, Apple and Qualcomm have agreed to settle all outstanding litigation in their seemingly never-ending worldwide legal battle. The two parties have even agreed to extend licensing and chip supply contracts. This paves the way for Qualcomm to supply 5G modems to Apple for its 5G iPhone.