On Monday Apple wanted to use Qualcomm’s 4G LTE processors in its newest iPhones, but the chipmaker wouldn’t sell to it, Apple’s operating chief testified.
And that’s had a break effect on how soft Apple can make the shift to 5G.
Qualcomm continues to provide Apple with chips for its older iPhones, including the iPhone 7 and 7 Plus, Apple Chief Operating Officer Jeff Williams testified, on Monday during the US Federal Trade Commission’s trial against Qualcomm. But it won’t provide Apple with processors for the newest iPhones, since the two began fighting over patents, he said. And Williams believes the royalty rate Apple paid for using Qualcomm patents — $7.50 per iPhone — is too high.
“We have been unable to get them to support us on new design wins past that time [when Apple filed a lawsuit against Qualcomm],” Williams said. “This has been a challenge.
The FTC has accused Qualcomm of operating a monopoly in wireless chips, forcing customers like Apple to work with it exclusively and charging excessive licensing fees for its technology. The FTC has said that Qualcomm forced Apple to pay licensing fees for its technology in exchange for using its chips in iPhones. The trial kicked off Jan. 4 in US District Court in San Jose, California. Testimony covers negotiations and events that occurred before March 2018 and can’t encompass anything after that date.
Apple makes its own application 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.
And it’s believed the next iPhone will also use only Intel chips, something that will make Apple late to the market for 5G phones. By the 2019 holiday season, every major Android vendor in the US will have a 5G phone available. But Intel’s 5G modem isn’t expected to hit phones until 2020.
“The strategy was to dual-source in 2018 as well,” Williams said Monday. “We were working toward doing that with Qualcomm, but in the end they would not support us or sell us chips.”
He said he contacted Qualcomm CEO Steve Mollenkopf to get him to sell chips to Apple. When Qualcomm refused, Apple had to call Intel’s CEO at the time, Brian Krzanich, to ask him to supply all modems needed for the iPhone instead of only half the volume.
“He had to scramble,” Williams said. “We would have loved to continue to have access to Qualcomm’s tech.”