Apple makes roadmap for in-house cellular modems, potentially challenging Qualcomm’s dominance – report

Apple (NASDAQ:AAPL) is planning to bring a series of cellular modem chips which will replace parts from its longtime partner and competitor Qualcomm (QCOM), Bloomberg News reported.

Shares of Apple were largely flat, while Qualcomm’s stock was down around 1% on Friday.

Apple’s self-developed modem system will be launched next spring, the report added, citing people with knowledge of the matter. The component is scheduled to be part of Apple’s entry-level smartphone, iPhone SE, which is expected to be updated in 2025 for the first time since 2022.

This is expected to be followed by newer generations of chips that would become increasingly more advanced. The iPhone maker intends to ultimately overtake Qualcomm’s technology by 2027, the report noted.

Apple has spent a long time and money to bring the modem to the world. The company initially hoped to unveil the chip to market as early as 2021. To boost its efforts, Apple invested billions of dollars to establish testing and engineering labs globally. The company also paid around $1B to buy Intel (INTC) modem group and millions more to hire engineers from other tech companies, according to the report.

Over the years, Apple faced several challenges, such as early prototypes were big, ran too hot, as well as not power-efficient. Apple and Qualcomm have also been in a legal tussle over licensing payments and it has not gone Apple’s way, the report noted.

However, after revising development practices, reorganizing management and hiring new engineers from Qualcomm itself, Apple is now confident it has pulled it off, the report added.

Apple said in an emailed statement to Seeking Alpha that it had “nothing to share on this.” Qualcomm did not respond to a query from Seeking Alpha as of the publication of this report.

When the iPhone SE launches in a few months, it would have the Apple’s own modem, which has been code-named Sinope. The phone will also see features such as Apple’s AI tool, Apple Intelligence, and edge-to-edge screen design, which is already used in higher models, according to the report.

However, the modem will not be used in Apple’s higher-end devices. It is slated to show up in a new mid-tier iPhone later next year, dubbed D23, which features a thinner design than current models. The chip will also be launched as early as 2025 in the company’s lower-end iPads, the report added.

To prepare for the iPhone SE, Apple has been secretly evaluating the new modem on hundreds of devices deployed to staff worldwide. The company has also been carrying out quality assurance testing with its carrier partners globally, the report noted.

Apple decided to begin with lower-end products, partly, as a modem is a risky effort because if it does not work properly, customers could see dropped calls and missed notifications. In addition, Apple’s modem is not as advanced as the latest modems from Qualcomm, which means the first Apple modem is a downgrade from the component currently in the iPhone 16 Pro, the report added.

Apple’s modem would not support mmWave, a type of 5G technology used by Verizon Wireless and other carriers. Apple’s product would depend on the Sub-6 standard, a more common technology used by the current iPhone SE, as per the report.

In addition, the first Apple modem will also only support four-carrier aggregation, a technology which combines bands from many wireless providers together to increase network capacity and speeds. Meanwhile, Qualcomm modems can support six or more carriers at the same time, the report noted.

In lab tests, the first Apple modem’s threshold of download speeds is about 4 gigabits per second, less than the top speeds provided by non-mmWave Qualcomm modems, the report noted. Real-world speeds for both types of modems are usually far less, means that customers may not see much difference in daily use.

Apple’s new modem will be produced by Taiwan Semiconductor Manufacturing (TSM), which also makes main processors inside the iPhone, iPad, Mac and other devices from Apple, the report noted.

TSM did not respond to an email from Seeking Alpha till the time of publication of this report.

Apple’s modem will have several advantages, such as it will be well integrated with Apple-designed main processors to use less power, scan for cellular service more efficiently and better support on-device features to connect to satellite networks. The modem will also be able to provide better performance relative to specific absorption rate, or SAR, limits because it will be managed intelligently through the main processor, the report noted. SAR is a measure of the rate of radiofrequency energy absorbed by the body.

Cupertino, Calif.-based Apple also intends to include support for dual SIM dual standby, or DSDS — this mode allows a device with two SIM cards to make or receive calls using either SIM card.

Apple’s modem will work with another new Apple part — a radio frequency front-end system, or RFFE, known as Carpo, which supports devices to connect to cellular networks. That component will also take away business from Qualcomm, and could eventually impact another supplier, Qorvo (QRVO). Currently, Apple uses Skyworks Solutions (SWKS) and Broadcom (AVGO) for so-called RF filters — collaborations which will continue. Apple and Broadcom extended their supply deal in 2023, the report noted.

Qorvo, Skyworks and Broadcom did not respond to a query from Seeking Alpha till the time this report was published.

To make the modem, Apple also swiftly expanded its office space in San Diego and other parts of Southern California. Some of the development work for the modems has also been undertaken in Cupertino and offices in Munich. The initiative has been a priority for Apple’s hardware technologies team, which is headed by Johny Srouji, according to the report.

In 2026, Apple plans to inch closer to Qualcomm’s abilities, with its second-generation modem, which will begin rolling out in higher-end products. This chip, known as Ganymede, is anticipated to be seen in the iPhone 18 series that year, as and upgraded iPads by 2027, the report noted.

Ganymede will potentially catch up to current Qualcomm modems by having support for mmWave, download speeds of 6 gigabits per second, six-carrier aggregation when using Sub-6, and eight-carrier aggregation when using mmWave, the report added.

In 2027, Apple intends to introduce its third modem, dubbed Prometheus. The company hopes to surpass Qualcomm with that modem’s performance and AI features by that point. It will also have support for next-generation satellite networks, the report noted.

In the future, Apple is thinking of merging its modem and main processor into a single component, the report added.