Apple's In-House Modem: A Bet on the Future, But Short-Term Payoff Uncertain

Apple's In-House Modem: A Bet on the Future, But Short-Term Payoff UncertainOn August 19th, Apple announced their decision to ditch Qualcomms modem chips. While this may not yield immediate benefits, it undeniably sets a solid foundation for their future product roadmap

Apple's In-House Modem: A Bet on the Future, But Short-Term Payoff Uncertain

On August 19th, Apple announced their decision to ditch Qualcomms modem chips. While this may not yield immediate benefits, it undeniably sets a solid foundation for their future product roadmap.

Apples hardware engineering team has always been a core strength, driving groundbreaking processors for iPhones and iPads, successfully eliminating Intel chips across the entire Mac product line, and introducing innovations like TouchID and FaceID. Renowned for their chip design prowess, they consistently push the limits of speed and battery efficiency in Apple devices. From the A4 chip in the iPad onwards, Apple has embraced in-house technology across all its major devices. This team has also optimized suppliers for key components like displays and batteries, driven advancements in photography, enabled efficient wireless syncing between devices, boosted data transfer speeds, and delivered industry-leading OLED displays.

Simply put, Apples in-house chip efforts are dedicated to enhancing device performance and inter-device collaboration. Johny Srouji, head of the team, emphasizes this commitment, stating that they prioritize creating their own solutions for critical challenges. He clarified in a past interview, "If it's good enough, we'll take it, because I want the team to focus on the things that really matter."

Yet, under Sroujis leadership, the team is now tackling the development of an internal cellular modem, a component that's crucial for devices like the iPhone and Apple Watch. While this endeavor might not immediately reap significant rewards, Apple's long-term aim is to cultivate their modem into a more advanced component, ultimately transforming the iPhone's look and features.

For years, Apple relied on Qualcomm's modem chips, as they are industry leaders in the field, and modems are arguably the second most important component in a phone after the main processor, demanding highly complex manufacturing. Despite patent disputes in 2018, Apple initiated their own modem design.

Unlike areas like processors, AI engines, and sensors, the room for improvement in Qualcomm's modem design is limited. Existing chips are already highly advanced, rigorously tested by mobile operators worldwide, and proven reliable. Therefore, any upgrades Apple makes to the modem in the short term are unlikely to directly enhance the user experience. Srouji also conceded in an interview that developing a modem is "extremely difficult."

Despite these challenges, Apple perseveres with this project, investing billions of dollars, engaging thousands of engineers, and pouring millions of hours into it, even with limited initial performance gains. Even insiders admit that users don't truly care about the manufacturer of the modem in their phones.

This project allows Apple to boast that the most critical component of their iPhone is internally produced, potentially becoming a marketing point. But the user experience will remain largely unchanged.

Apple's modem project has faced setbacks over the past few years. Due to performance and overheating issues, the debut of the modem has been pushed back to at least next year. Apple plans to gradually introduce the chip, starting with niche models, with a full roll-out potentially taking years. To facilitate this transition, Apple has extended its supply agreement with Qualcomm until March 2027.

Controlling costs is another factor driving Apple's in-house modem development. For a long time, Apple believed they were overpaying Qualcomm for modem chips. However, Qualcomm claims that even with Apple's self-developed modem, they would still need to pay licensing fees as they can't entirely avoid patent infringement.

Long term, Apple intends to integrate their modem design with a new wireless chip that will handle Wi-Fi and Bluetooth connections. This would create a unified connectivity component, potentially improving reliability and battery life. There's even the possibility that Apple could one day integrate all these technologies into the device's main system-on-a-chip (SoC). This would further lower costs and save space for more design options.

Furthermore, if Apple ultimately manages to save money by cutting ties with Qualcomm, they might re-invest those funds into developing new features and components.

Apple's modem shift could mirror the trajectory of their neural engine development. This section of the processor handles AI tasks and, while its benefits weren't immediately apparent upon its introduction in 2017, it has since validated Apple's foresight as AI has gained prominence.

Historically, Apple has gone through multiple iterations in their selection of modem suppliers. Before using Qualcomm modems in 2011, they relied primarily on chips from Infineon. Back then, users often complained about poor data connections and dropped calls. From 2016 to early 2020, Apple used Intel modems, but those chips also drew criticism.

Modems need to be tested in a vast array of global environments, and rolling them out to hundreds of millions of users poses significant risks. Should Apple stumble during this process, it could trigger the biggest iPhone scandal since the "Antennagate" incident. Back then, Apple resolved reception problems by offering free casesbut a simple solution might not be viable this time.

Srouji would undoubtedly avoid such a crisis. But the new modem will inevitably face intense scrutiny. YouTube will be flooded with speed test comparisons, and any minor glitch could be amplified by users.

Ideally, everything will run smoothly, and most customers won't even notice the change. But the true value of this project won't be apparent for a few years - when Apple hopes that it will pave the way for a better iPhone.