Chip Challenge

Apple Inc is one of the world’s largest technology companies with investments in various sectors and fields. Recently, the company made a foray into the world of semiconductors and chipsets. The switch has helped make Apple a powerhouse within the semiconductor industry in the past decade or so. The move impacted several major manufacturers who earlier used to supply chips to the American tech-giant. However, the iPhone maker will soon face their sternest test in the coming years. The biggest and toughest challenge that Apple will face will be Qualcomm. In this article, we will take a look at what Apple needs to do to replace Qualcomm’s cellular modems with its unique design.

Can Apple Succeed?

On Friday, Qualcomm slumped to its steepest decline since mid-June when it fell by over 7% to $144.28. Bloomberg was the first to report in June that Apple was entering the modem industry by kicking off development on its unique design. However, this reaction severely undermines the challenges that Apple will have to face to make it in this industry. According to analysts and experts, Apple will b confronted by the primary task of replacing Qualcomm in the coming years. Many also questioned whether the California-based tech giant had bitten off more than what it could chew. With doubts swirling around the industry, Apple will have to come back strong with a design that is both unique and highly functional.

Questions Raised

A representative of Raymond James, Chris Caso mentioned that the most significant questions that experts have are when and if Apple will be successful. Many experts believe that there are no assurances that Apple will be highly successful in developing a high-end and cutting-edge modem. However, modems are one of the most vital elements that make up an iPhone. It is the part that is responsible for connecting the phone to various cellular networks. Without this device, people could no longer browse the internet, message their friends over the internet, or make phone calls. Hence, ensuring that this component works smoothly and seamlessly is vital to ensuring the mobile in itself is successful. However, designing and crafting a modem requires specialized engineering and critical and broad industry knowledge and know-how. Both of these might take significant time to acquire, which Apple does not possess.

Other options and issues

Meanwhile, wireless carriers work differently as the networks built to support them use distinct radio frequencies. But, in that case, the equipment required to capture these waves are also very different and must conform to various stringent local government rules. As a result, modems have to integrate seamlessly with different technologies and fit into older systems as well with ease. The ever-growing need for cellular data and technical prowess makes this divide and the need for complexity even more considerable. Hence, field testing will be an integral part of the research and development process. 

What Qualcomm Does Right

To facilitate such testing, Qualcomm has labs that work towards replicating the varying environments that mobile phones will face. These labs accurately predict and run scenarios that phones will experience around the world. Additionally, engineers spent decades working with various carriers to fine-tune their technology and integrate it seamlessly over the years. It is this experience and knowledge that has helped Qualcomm rule the semiconductor and modem industry all this time. It is also precisely these qualities that served as a barrier to other tech companies that wished to work their way into the lucrative semiconductor industry.

Expert Opinion

Analysts at Bernstein Research mentioned that while Apple has a history of immaculate expertise in semiconductor design. However, even with all that expertise, modems are very challenging to design and get right. The company took around five to ten years to come up with a sustainable and viable processor for the personal computer system. Experts believe that modems pose an even more significant challenge than PC processors, making this a difficult journey for the American giant.

Also, Qualcomm enjoys another vital advantage when compared to Apple. It regularly collaborates with players in the wireless industry and helps in the development of cellular standards. As a result, most of their chips are the first to market when it comes to functionality and features. This has been one of the things that have helped Qualcomm maintain its lead over its competitors.

However, it is foolish to write Apple off since it has in the past taken on influential industry players and won. The company started designing PC processors to displace Intel from being used in Macs. Since 2010, Apple has been using its own processors in the iPhone and iPad. The company has also been successful in developing wireless and power-management chips for the Apple Watch. While the challenge might be harder this time around, users will have to wait and see if it can meet this stern challenge.