uploads/2018/03/3-30.jpg

Why It May Be Hard for Apple to Exclude Qualcomm Completely

By

Updated

Qualcomm sought to ban iPhone sales

The idea of Apple (AAPL) leaving Qualcomm (QCOM) for Intel (INTC) for wireless chips for future iPhones is believed to be tied to Apple’s legal dispute with Qualcomm over patents and royalties. Apple and Qualcomm have sued and countersued each other in several countries, with Qualcomm last year seeking to ban iPhone sales in China, one of Apple’s biggest international markets.

But Apple’s own product plan and component sourcing strategy may not allow it to completely cut Qualcomm out of its supply chain.

Article continues below advertisement

Toward 5G-ready iPhones

Apple’s 2018 iPhones are expected to feature faster wireless chips as an initial step toward iPhones that are ready for 5G (fifth-generation).

But the KGI note cited by 9to5Mac pointed out that Intel may not be ready for 5G as quickly as Qualcomm. According to Qualcomm, a leading supplier of mobile chips, 5G-ready mass-market smartphones will start arriving in 2019. Verizon (VZ) and AT&T (T) are planning to start offering 5G services in certain markets as soon as this year, while T-Mobile (TMUS) is eyeing 2019 for the start of its nationwide 5G network rollout.

Apple favors diversified supply chain

As for its supply sourcing strategy, Apple is known to favor a diversified supply chain where it doesn’t rely on a single supplier for crucial components. So relying on Intel exclusively for wireless chips for the iPhone would go against Apple’s well-known strategy. But perhaps Apple could be willing to take some risks if that would help it put Qualcomm where it wants it to be.

Advertisement

More From Market Realist