A modern smartphone is filled to the brim with chips, which is why the smartphone revolution has been a major boost for many chip companies. Two of the most important chips inside a modern smartphone is the applications processor and the cellular baseband. Qualcomm has, arguably, the best cellular modem technology today, and, at least as far as merchant silicon goes, has leadership in applications processors. This means that for flagship devices from vendors that don't design their own chips (such as Apple), Qualcomm generally gets both the applications processor and baseband spots, usually in the form of a single integrated solution.
Qualcomm was Apple’s sole supplier of wireless modems till 2 years ago, with the launch of the iPhone 7 and iPhone 7 Plus, when Intel began supplying chips for some iPhones that were not compatible with Verizon and Sprint CDMA networks. We believe that Qualcomm currently handles about 50% of the global standalone wireless modem chip market, followed by MediaTek (25%) and Intel (6%), with Samsung, Huawei, and Spreadtrum taking the bottom.
Though, Apple, in January 2017, accused Qualcomm of withholding nearly $1 billion in promised payments in punishment for "responding truthfully to law enforcement agencies." Apple's connection with a South Korean antitrust investigation had resulted in Qualcomm being fined about $853 million, and the U.S. Federal Trade Commission later launched a similar probe. Qualcomm was moreover accused of forcing companies buying chips to pay for copyright licenses at the same time. The firm maintains a variety of key patents on the cellular technology, leaving it to derive a significant part of its income from royalties.
Qualcomm beforehand supplied all modems for iPhones, only Apple now uses 4G chips from Intel in nearly half of its phones -- especially those running on AT&T and T-Mobile networks. The move gave Apple more advantage in its battle with Qualcomm, but it has been examined for hurting consumers by limiting their network speeds.
Now, CNET reports that Qualcomm will no longer provide Apple with chips for its 2018 iPhones. George Davis, Qualcomm's Financial Chief said "We believe Apple intends to solely use our competitor's modems rather than our modems in its next iPhone release," during a profit call with industry analysts.
This doesn't imply that Qualcomm and Apple are done permanently, according to Cristiano Amon, head of Qualcomm's chip division. The company thinks they can be a supplier for Apple in the future.
Qualcomm didn't particularly mention which competitor Apple would buy modems from, but rumors say it's Intel. We wonder if Intel will be capable of keeping up with the iPhone's production need or if Apple will find another chip maker to provide modems in case of a shortage. In any event, Qualcomm won't be a part of the 2018 iPhone.
