
Apple in Advanced Talks to Buy Intel’s Smartphone-Modem Chip Business - mudil
https://www.wsj.com/articles/apple-in-advanced-talks-to-buy-intels-smartphone-modem-chip-business-11563830356?mod=rsswn
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jillesvangurp
Interesting, Apple could do some interesting things with this. The qualcomm
situation has resulted in a lot of stagnation in our industry. Companies like
Apple are forced to work with them. But given their track record as being
aggressive on the IP front (both sides), they have to spend a lot of effort
engineering around this stuff. Companies like Intel, Qualcomm, Nokia own a lot
of these patents and Apple has been paying them off for as long as the iPhone
has been around.

To this day there's not a single Apple laptop that ships with built in 4G
modems even though that would make sense from a functional point of view. I
suspect the reason is not technical but related to IP and pushback from other
players in the ecosystem (e.g. operators). As soon as you add 4G/5G to the
mix, there are suddenly a lot of sneaky patents that come into play.

At least you can't tell me that nobody in Apple pondered the question "hmm I
wonder which of our Mac Book Air customers would not like to be connected
anywhere on this planet". The reason this is not a feature is that it would
add a lot of cost related to patents and IP licensing. This deal might fix
that partially. Software sims have been similarly difficult for the same
reasons and another thing Apple has been pushing on lately.

Apple doing this stuff in house means they can push harder on this front.

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Spooky23
Even with Apple margins, the cellular radio adds like $150 to an iPad.

The technical issues are accommodating it with the design decisions made.
Personally, I think it’s a smarter decision to make the iPhone/iPad pairing
model low friction, as Apple has.

This is also a small/minority use case. LTE laptops are a very small product
category — nobody wants to add a cellular plan. This feature will only matter
if carriers start killing cable with millimeter wave 5G.

~~~
onlyrealcuzzo
How are carriers going to kill cable with 5G? Won't they still want to charge
$10/Gb? If that's the case, 4G is already faster than a lot of people's
current connection at $50. If you use more than 5 Gb per month, it wouldn't
make sense to go full mobile.

For example, 30 minutes of TV every other day is already pushing 8 Gb...

~~~
Spooky23
When there are competitive spirits at work, prices magically drop. I pay
Spectrum $69 for 100/5 service in my city, which has no other options. My
brother pays $45 for 300/30 service 4 miles away in a suburb where Verizon has
chosen to compete as there are fewer poor people.

Right now there's a 5G land-grab going on, with hundreds of millimeter-band 5G
poles being dumped everywhere. I assume that's for a wireless fixed ISP
service, as it doesn't add value for normal mobile service.

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pentae
The irony that Apple really hate paying that royalty but expect App developers
to do the exact same.

Here's a fun anecdotal story. Me and my partner both have iPhone 7+ devices
and the same carrier. I get 2 bars of 4G signal and she gets none inside our
apartment. She has to walk outside to take calls. I couldn't understand how
this was possible but after some research I discovered that my iPhone has a
Qualcomm modem and hers has an Intel modem.

Say what you want about Qualcomm but they make the best modem in the business.
The reason I have not upgraded is quite simply because Apple no longer make a
phone with a Qualcomm modem and I won't be able to get signal where I live.

Obviously, i'm an edge case. But for the average person paying $1500 for the
"Best smartphone in the world" it sure seems crazy that they're also getting
the worst modem in the world packaged inside it so Apple can save a few
dollars on the cost of the unit.

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umvi
> it sure seems crazy that they're also getting the worst modem in the world
> packaged inside it so Apple can save a few dollars on the cost of the unit.

A few dollars? Qualcomm skins you for all you are worth. Yeah, the actual chip
is few bucks more, but the support framework for that chip is mega $$$. Want
to debug the modem? Looks like you need Qualcomm's proprietary debug tool
QXDM! That'll be $25K per year _per seat_. Oh and if you want their support
(so you aren't flailing around with their gigabytes of generated logs) be
prepared for another $200k annual support subscription per team. Want a
certain document so you can figure it out yourself? $$$.

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incognition
As developers we feel you but to the original point, Apple is already paying
that and is basically A/B testing how much pain consumers can take. All at a
premium consumer price.

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bpye
This worries me. Wouldn't this leave us with Qualcomm once again the only
manafacturer of cellular modems for everyone else? I somehow doubt Apple would
keep supplying the Intel parts to any other OEMs.

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tolqen
Nobody except Apple bought the Intel parts anyway (possibly because they were
absolute flaming garbage relative to Qualcomm’s products), which is why we’re
in this position in the first place.

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dnautics
Wasnt ericsson supposed to buy a buncha intel modems?

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StudentStuff
IIRC that deal was Ericsson fabbing their LTE & 5G basestations on Intel's
10nm process, but Intel's 10nm process can't produce large working chips in
volume (and likely never will), which has kneecapped Ericsson as a cellular
vendor.

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godzillabrennus
TIL Ericsson still exists.

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TorKlingberg
Ericsson is one of the biggest vendors of telecom network equipment, including
4G base stations. They sold the phone business to Sony years ago.

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phenylene
Can someone explain why Intel was having such a hard time competing with
Qualcomm? What are the challenges in developing modems?

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tus88
> What are the challenges in developing modems?

Miniaturized, high frequency, low-power, high bandwidth, radio modems to be
exact - supporting multiple complex protocols. In real-time. Meaning it is all
done in hardware, although firmware does some management stuff. It's about as
hard as silicon engineering gets.

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mytailorisrich
Only PHY is in hardware, indeed with firmware control.

Then, the protocol stacks on top of that are enormous and complex. The
software is very large.

Broadcom also tried and failed because they underestimated the task, IMO.

Those who can/could make it happen are those who are willing to invest
massively over many years and, ideally who have a sure customer. E.g. Huawei
who is willing to take the long view and who ships hundreds of millions of
phones.

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martinald
Intel literally spent billions on this effort and Apple was desperate to use
them to avoid being reliant on Qualcomm - and still failed.

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selectodude
Apple’s quarterly revenue is larger than Qualcomm’s market cap. This is
clearly about more than the money for them. I wouldn’t be shocked if they
spent 10bn and poached away half of Qualcomm’s best engineers. They’ve already
been on a hiring spree and opened a pretty nice office down in San Diego.

~~~
obliviousonions
yup. Office is literally 5 minutes away from from Qualcomm, so no problems
with the commute, and I'm sure they would be willing to pay much more than
Qualcomm. Only thing is the patents. Qualcomms real value is in the crazy
amount of R&D they do, and the patents they have to show for it.

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dano
This ties in nicely with Apple's new office in San Diego and the recruiting
they're doing of Qualcomm employees.

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bristolppp1980
My guess is this won't happen.

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shmerl
Apple getting more patents? What can go wrong.

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kennywinker
I don’t think apple has a particularly bad track record with abusing
patents... they’ve used them in big ip battles with major competitors who also
used patents against them, never to crush small innovators that I am aware of.

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shmerl
I think they are quite infamous in this regard, like going after rounded
corners, "slide to unlock" and similar trivial ideas that not only have prior
art, but shouldn't be even patentable to being with. So I don't have any trust
in them not abusing any new patents.

Small innovators are often simply too worried to enter some markets due to
this. Because they don't have the arsenal of big competitors to fend off
patent threats.

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kennywinker
Do you remember the early samsung galaxy phones? They were blatant ripoffs of
all the original design apple was doing in the phone space. From the basic
form factor down to small interactions. You can argue that slide-to-unlock
should not be patentable (I agree) but if it is, using it to deter your
largest competitor from cloning your product is actually what patents are
supposed to be for... i.e. come up with your own solution don’t copy mine.

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shmerl
Whether they were a rip off or not, I won't argue (I use neither Samsung, nor
Apple and I don't see such style aspects to be a required matter of
exclusivity). But Apple didn't hesitate to attack using trivial (which means
invalid) patents like that. The end doesn't justify the means. Just because
they thought they were ripped off, doesn't excuse their abuse of the broken
patent system.

Next thing they can imagine they are being ripped off by some competitor,
because they don't like the color of some device or what not. So why should
anyone trust them not to do abuse the patent system, just because they can.

I.e. I see any such abusive company arming themselves with even more patents
like a very negative development.

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kennywinker
I guess what I’m saying is your problem seems to be a problem with the issuing
of trivial patents. Calling a company abusive because they use their patents
to protect their position is like calling a scorpion abusive because it
stings.

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shmerl
No, they don't have an excuse of using that weapon, just because the system is
broken enough to arm them with it. Surely, the system needs fixing. But foul
actors are sill foul regardless. That's pretty self explanatory.

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pankajdoharey
Intel seems to become pointless in near future, AMD is cutting fast into
desktop and server markets, Apple makes its own mobile chips and rest of the
industry buys quallcoms chips. Soon Apple may drop Intel altogether from its
laptops, and PC industry might follow the suite. What will Intel be doing in
near future is quite worrisome. Intel should have pursued modem chips more
effectively but their multi million dollar pay checks have to come from
somewhere so they refuse to drop prices in any segment. Is Intel planning to
shut shop in a few yrs?

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IceWreck
Apple sued Qualcomm to drop their prices and used Intel to keep them in check.
After their settlement/agreement with Qualcomm, they started using Qualcomm
and dropped Intel and then Intel quit the smartphone chip business. Now theyre
planning to buy Intel's smartphone SoC business for a fraction of the money
they would've paid before.

Nice strategy, but its somewhat unethical.

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briandear
How is it unethical? If you live in a village with two bakeries and one, your
favorite, starts charging you double for their delicious bread, you then start
shopping at the other one who’s bread is terrible, but suitable enough. Now,
faced with competition, your favorite bakery lowers their price, so you go
back to your favorite.

Now, the second bakery is hanging on by a thread because you aren’t buying his
bad bread. He decides to get out of the bakery business so he can use the
money to invest in his roofing business instead. You see an opportunity to
make even better bread than the best bakery, so you agree to buy the second
bakery.

Nothing unethical at all there. That’s exactly how free markets are supposed
to work. The key point is that nobody forced Intel to make bad modems and
nobody should be obligated to pay Qualcomm’s high prices. It isn’t Apple’s
fault that Intel modems weren’t that good. It isn’t Apple’s fault they want to
build something better than other market participants are currently providing.

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soup10
Apple singlehandedly making multibillion dollar chip deals that make or break
companies isn't "free market" for anyone but Apple.

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jsgo
That isn’t really fair to Apple (or long game, Intel) though. That basically
says that it is in Apple’s best interest to never deal with Intel because in
doing so, Intel becomes dependent upon them. If they would’ve remained with
Qualcomm from day one, Intel’s shortcomings in mobile (iirc, Intel and Windows
Phone tried to pair up a bit) could never be blamed on Apple.

That arrangement may work totally for Qualcomm and somewhat for Apple, but
it’d be devastating for Intel.

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simonh
I think the real risk here is Apple sucking the profitability out of the high
end modem business. Qualcomm makes most of their high end modem money out of
Apple. The other flagship Android phone makers may not be a big enough market
to justify Qualcomm developing the very costly high end modems they need. That
could leave Apple as the only manufacturer with the best modems.

We’re at least a few years away from that possibility, especially given the
poor state of the Intel modem technology, but if Apple can pull this off
they’ll have yet another technological exclusive differentiating feature. This
time, one truly central to the platform technology.

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ohazi
Qualcomm has prevented 20 years worth of upstarts from even attempting to
enter the high-end modem business. There isn't a market for high-end modems,
there's only Qualcomm.

At this point, nuking Qualcomm's profitability seems like the only reasonable
thing left to try.

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simonh
So now instead of Qualcomm monopolising high end modems in phones, we may well
end up in a situation where Apple will. Wonderful. High fives all round.

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danaris
That seems very unlikely.

For one thing, Qualcomm isn't going to be ditching the modem business; they
just aren't allowed to be predatory monopolists on it anymore.

For another, _because_ Qualcomm isn't allowed to use the anticompetitive
tactics they've used in the past, it will now be possible for someone else to
break into that market. It'll take a lot of time, money, and effort, to be
sure, but if someone else can get modems working even in the same quality
ballpark as Qualcomm's, they'll have a guaranteed revenue stream from people
who would be overjoyed to stick it to Qualcomm.

And, of course, at this point, there's no guarantee that Apple will be making
modems for anyone but themselves.

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scarface74
The thing is that the entire high end Android market is much smaller than the
iPhone market. Qualcomm won’t have any incentive to invest a lot of money in
high end modems if Apple is not a customer. You’re seeing the same thing on a
much smaller scale play out in the wearables market. The only company
producing enough watches to make an investment in the processors required is
Apple.

Of course Apple isn’t going to make modems for anyone but themselves.

