Intel has announced today that it will exit the 5G mobile modem market. The company will instead focus all its efforts on 5G modems for PCs. Intel also noted that it will continue its 5G infrastructure business. The announcement came a few hours after Apple and Qualcomm decided to settle their long patent infringement dispute. The deal means that moving forward, Apple will continue to use Qualcomm’s 5G components in the iPhone and pay royalties as agreed in the new plan.
The decision, however, came as a huge surprise. In fact, at the time of the announcement, lawyers from both companies were preparing their opening statements in the latest courtroom trial that was supposed to start yesterday in Southern California. Intel, however, didn’t comment on the circumstances that led to the termination of its mobile 5G plans. Although it’s very likely that Apple’s deal with Qualcomm was the trigger, there could still be other reasons that may have led to this. However, the decision means that Intel has just ceded its business in this space to Qualcomm.
A statement that was released by Intel CEO Bob Swan noted that, although the company is excited about the 5G modems in the smartphone space, right now there’s no clear path to profitability. Swan added that 5G still remains a crucial strategic area for the company. He said that Intel had actually developed a lot of technologies that are applicable in this space and that there will be many other areas where it will offer its expertise.
Apple and Qualcomm didn’t say exactly why they decided to settle the patent dispute. However, some reports indicate that Apple was growing weary of Intel’s ability to supply modems for next year’s iPhone models. Intel actually became the sole supplier for Apple for smartphone modems last year. This was during a period where Intel was entangled into a complex dispute with Qualcomm, the other company that was planning to supply Apple with the same technology.
The new deal will now see Qualcomm get an undisclosed amount of money related to the royalties that Apple had withheld during the dispute. Apple initially accused Qualcomm of overcharging licensing fees, something that Qualcomm categorically denied. But it seems this is all water under the bridge. The two companies have now entered into a six-year global patent that could be extended by another two years. Essentially, Qualcomm is now the sole and probably the biggest supplier for 5G smartphone modems.
The 5G components that Qualcomm has been working on are likely to feature in Apple’s new phones next year. Apple has already confirmed that it is planning to offer customers 5G-enabled phones. The plan is to have the devices available in 2020. The dispute with Qualcomm had threatened to torpedo this plan but it seems the smartphone giant is now back on track. It’s not clear though whether Intel will be heading back into this space in the future. The company has said very little about the matter and we don’t expect too much information to be released in the coming days.