Intel is reaping the rewards of Apple’s scrap with Qualcomm

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Intel is starving for a chunk of iPhone's chip business. Intel has gained unexpectedly high iPhone chip
orders.
Photo: Thomas Hawk/Flickr

Intel is benefitting from Apple’s current standoff with
Qualcomm, with Apple reportedly upping its wireless “baseband”
chip orders from Intel for the iPhone.

Apple
first added Intel as a second baseband supplier in 2016. This
was part of its strategy to diversify
the number of suppliers
that provide each of its
components, to allow Apple to lessen its risk and negotiate
more favorable terms for components.

At the time, Apple was sourcing 30 percent of these chips from
Intel and the rest from Qualcomm. Intel charged $15 for chips,
compared to Qualcomm’s $23 — but Intel’s price was lower as the
result of inferior performance. As a result, market watchers
expected that Apple would switch back to Qualcomm.


Instead, Apple is now reportedly
giving Intel 50 percent of these chip orders, as a result of
its standoff with Qualcomm. This could rise to 70 percent of
the baseband products for iPhones by 2018.


However,
with Apple’s current strategy for moving its chip development
in-house, Intel’s current fortunate position could turn out to
not be a lasting long-term strategic partnership. This
“insourcing” has so far affected Apple GPU
maker Imagination
Technologies
 and power-management chip
company Dialog
Semiconductor.

Apple’s Qualcomm standoff


The
relationship between Apple and Qualcomm soured earlier this
year after Apple filed a
$1 billion lawsuit
 against the chipmaker, and stopped
paying royalties because the two sides were unable to agree
what the fee should be. During Apple’s Q2
2017 earnings call
, Tim Cook said that, “Qualcomm is trying
to charge Apple a percentage of the total iPhone
value. They do some really great work … but it’s one small
part of what an iPhone is.”


Qualcomm
then hit
back with a lawsuit of its own
, arguing that Apple is
being misleading and has breached its
contract. Qualcomm reportedly plans to try and force
Apple’s hand by seeking
a ban on Apple importing iPhones
 into the United
States.

In addition, there has also been a squabble
between Qualcomm
and four of Apple’s suppliers
, after Apple allegedly
pressured them to withhold royalty payments to Qualcomm.

Via: Digitimes




Source: appleact.com
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