Apple started sourcing LTE modems from Intel with the iPhone 7 last year. Despite the inferior performance offered by Intel’s modem, Apple sourced 30 percent of the modem from the company, with the rest of the orders going to its long-time baseband supplier, Qualcomm.
This year, Apple has gone ahead and placed 50 percent of its baseband order to Intel for the iPhone 8 through the end of 2017. A large part of this is due to the fierce legal battle going on between Apple and Qualcomm over royalty disputes. Many analysts also believe that Apple will end up switching to Intel as its primary baseband supplier for the iPhone by 2018.
Another benefit of this move to Apple will be a lower component cost for the modem. Up until last year, Qualcomm charged $23 per baseband, while Intel’s offering was priced significantly lower at $15 due to its inferior performance.
Apple has continued to rely on Qualcomm’s baseband for the iPhone since the latter has a monopoly on basebands with CDMA support. Intel, however, recently announced its XM7560 LTE modem which supports CDMA networks as well. Plus, Verizon is now on the verge of phasing out its CDMA network in the US which paves the way for Apple to switch to Intel as its sole baseband supplier in the coming years.
Apple and Qualcomm are currently engaged in a $1 billion lawsuit. Apple first sued Qualcomm after an FTC modem complaint and its unfair royalty charges. A few months later, Qualcomm went ahead and countersued Apple and accused it of not using its supplied baseband inside the iPhone 7 to its full potential. In retaliation, Apple asked its key suppliers to stop paying Qualcomm royalties as well.