Is Apple modem delayed because of Qualcomm patents? The simple answer is NO!
When highly reliable TF International securities analyst Ming-Chi Kuo tweeted claiming that Apple's in-house modem effort had failed (for 2023 iPhones), people had varied reactions. Many were shocked, some were in disbelief and others scratched their heads at what might have gone wrong. But few like me, who know how hard it is to develop cellular modems, felt vindicated. In my earlier article and recent Wall Street Journal interview, I had expressed my views about the effort.
Some analysts and news outlets with an unwavering belief in Apple's capabilities, looking for excuses, started speculating that it is not Apple's inability, instead, some obscure patents that Qualcomm holds are the reason. That speculation can't be farther from reality for anybody who knows patents and licensing.
Do modem vendors need an IP license from Qualcomm?
The simple answer is NO! For example, MediaTek, the other major modem provider, and Qualcomm's direct competitor, doesn't need or have a license from Qualcomm. Intel, with its now defunct modem business, didn't need or have a license from Qualcomm. Similarly, Apple doesn't need Qualcomm's license to make or sell its modem.
The reason is that Qualcomm licenses its patents (IP – Intellectual Property) to device OEMs. Before legally selling their device, any 3G, 4G or 5G device OEM has to get a license from Qualcomm (and a few other IP holders such as Ericsson and Nokia). The question of whether IP holders have the right to enforce their licenses on OEMs (vs modem vendors) has been vigorously litigated and decisively settled in the US federal courts.
To know more about this litigation, check out my extensive article series covering the yearlong FTC vs. Qualcomm antitrust case.
Apple already has an IP license from Qualcomm
Essentially, patents can be grouped into two categories — Standard Essential Patents (SEPs) and non-SEPs. As the name suggests, SEPs are a must for any device to work in compliance with the standards. For example, if an OEM is making a 3G, 4G or 5G device, they need to implement the technologies defined in the SEPs and hence, require a license to use them. Similarly, non-SEPs are not essential but desirable to achieve higher performance than the bare minimum defined in the standards or for differentiation.
To know more about SEPs and non-SEPs, check out my article series "Demystifying Cellular patents and licensing."
Qualcomm offers SEP-only or both SEP + non-SEP licenses at different price points. The licensing fees are a small percentage of the device's Average Selling Price (ASP), with a pre-set maximum ceiling. Apple being a cellular device OEM, already at least has a SEP license. If you recall, Apple and Qualcomm settled their multiple legal disputes in 2019 by signing licensing and modem supply contracts.
Regarding the claimed Apple modem delay, media outlets have further speculated that the reason might be a couple of non-SEPs. Because of the secret nature of licensing deals, there is no public information on whether Apple has SEP or non-SEP licenses from Qualcomm. Even if it is SEP-only, that can't be the reason for the delay because these cited non-SEPs are not essential for the basic functioning of the device. If Apple performance is higher than defined in standards, they can either develop technologies that bypass those patents or take a non-SEP license from Qualcomm. After all, innovation has to be rewarded. That's the basic tenet of IP regime!
Some might argue that getting this new license could be what is delaying the modem. Well, first of all, it's all speculation, and second, such requirement is not new or unknown. If Apple didn't anticipate it, then it's on them. But honestly, knowing how meticulously Apple plans its products, I am almost sure this is not the reason.
Does Apple need a Qualcomm license even if they use their modem?
The simple answer is YES!
OEMs need a license to sell their cellular devices, no matter who's modem they are using. Even now, when Apple uses Qualcomm modems, it has two contracts, one for the license and another for modem supply. As was made abundantly clear in the FTC case, there has to be a firewall between these two businesses.
An appropriate example is Samsung. Samsung is an OEM selling many cellular devices, and it has its own modem. Last week Qualcomm and Samsung announced that they extended their existing licensing contract for another seven years (until 2030) and signed a separate Snapdragon platform supply deal.
In summary, after examining all the possible angles, it is abundantly clear that patents can't be the reason for Apple's claimed modem delay. Then, the question becomes, is it really delayed? If so, what could be the reason? Well, wait for my next article to find out.
Prakash Sangam is the founder and principal at Tantra Analyst, a leading boutique research and advisory firm. He is a recognized expert in 5G, Wi-Fi, AI, Cloud and IoT. To read articles like this and get an up-to-date analysis of the latest mobile and tech industry news, sign-up for our monthly newsletter at TantraAnalyst.com/Newsletter, or listen to our Tantra's Mantra podcast.
Industry Voices are opinion columns written by outside contributors — often industry experts or analysts — who are invited to the conversation by Fierce Wireless staff. They do not necessarily represent the opinions of the Fierce Wireless editorial board.