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Intel exiting 5G Smartphone business, after Apple settles with Qualcomm

Intel Corporation has announced intentions to exit the 5G smartphone modem business in a move the firm says will help focus on “assessment of the opportunities for 4G and 5G modems in PCs, internet of things devices and other data-centric devices”.

In a statement, Intel CEO Bob Swan said, “We are very excited about the opportunity in 5G and the ‘cloudification’ of the network, but in the smartphone modem business it has become apparent that there is no clear path to profitability and positive returns.

5G continues to be a strategic priority across Intel, and the firm says it has developed a valuable portfolio of wireless products and intellectual property. But the firm sees more opportunities in a wide variety of data-centric platforms and devices in a 5G world.

The firm added that will continue to invest in its 5G network infrastructure business and will still continue to meet current customer commitments for its existing 4G smartphone modem product line. However, Intel does not expect to launch 5G modem products in the smartphone space, including those originally planned for launches in 2020. This is especially a bad position for Apple because it had planned on releasing its 5G iPhone in 2020.

Apple had planned to use Intel’s 8161 5G modem chip in its 2020 phones. While at that Intel hoped to fabricate the 8161 using its 10-nanometer process, which increases transistor density for more speed and efficiency. If these plans are still underway, Intel will be the sole provider of iPhone modems.

Intel is very excited about the opportunity in 5G and the ‘cloudification’ of the network, but feel that in the smartphone modem business it has become apparent that there is no clear path to profitability and positive returns. 5G continues to be a strategic priority across Intel, and their team has developed a valuable portfolio of wireless products and intellectual property. The team is assessing its options to realize the value they have created, including the opportunities in a wide variety of data-centric platforms and devices in a 5G world.

After settling with Qualcomm, Apple now has a secure pipeline of 5G modems, while Qualcomm doesn’t have to worry about the entirety of its business model being put underneath the microscope and potentially being torn to shreds. Although this settlement between the two doesn’t bode well for Intel.
It was largely assumed that Apple would tap Intel to supply 5G modems upon the release of its iPhone lineup in 2020. Unfortunately, with Qualcomm and Apple now working together again, Intel is out of the picture.

In the wake of Apple and Qualcomm’s settlement agreement, it’s most probably not surprising that Intel announced its intention to exit the 5G modem business as it pertains to smartphones. It’s worth noting that Intel was reportedly struggling to meet development targets for its 5G modem. There were also rumblings that Intel’s 5G offering would have paled in comparison to Qualcomm’s. Taken together, these two factors may have very well forced Apple’s hand to come to terms with Qualcomm.

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