Sep. 26, 2023 9:00 AM ET Apple Inc. (AAPL)
- Apple’s attempts to develop its own 5G modem have been unsuccessful, with reports suggesting its progress is three years behind Qualcomm.
- This has been further confirmed by Qualcomm’s supply agreement with Apple for the next three iPhone models running through 2026.
- This raises questions about Apple’s investment in a complex chip with little chance of success and the lack of pioneering focus on new products it once had.
- Apple needs a management change from the rest-on-its-laurels approach to a Satya Nadella-like vision; perhaps a 5G modem may create something much better than a chip, like a reborn company.
The article discusses Apple’s struggles in developing its own 5G modem and suggests that these challenges reflect poor leadership within the company. The author argues that Apple’s efforts to create its own modem have been unsuccessful, with reports indicating that it is three years behind Qualcomm in terms of progress. Qualcomm recently signed a supply agreement with Apple for the next three iPhone models, further solidifying its position as the leader in 5G modems.
The key points made in the article are as follows:
- Failed Modem Development: Apple’s attempt to develop its own 5G modem, starting with the acquisition of Intel’s modem division, has not yielded positive results. The author suggests that Apple’s modem team faced difficulties and that its progress is significantly lagging behind Qualcomm’s.
- Challenges in Replacing Qualcomm: Apple aimed to replace Qualcomm’s 5G modems with its own to gain more control over its hardware and reduce dependency on external suppliers. However, the complexity of modem development, along with Qualcomm’s strong intellectual property and market-leading products, has made this a challenging task.
- Slow Progress: The article highlights that Apple’s progress in developing a competitive 5G modem has been slower than expected, and it faces significant challenges in catching up with Qualcomm’s technology and IP.
- Long-Term Supply Agreement: Qualcomm’s recent supply agreement with Apple for modems through 2026 indicates that Apple will continue to rely on Qualcomm’s technology for its iPhones for the foreseeable future.
- Lack of Innovation: The author argues that Apple’s focus on modem development reflects a lack of innovation and a failure to invest in new product categories that could drive revenue growth.
- Leadership Change Needed: The article suggests that Apple needs a change in leadership, similar to Microsoft’s shift from Steve Ballmer to Satya Nadella, to refocus on innovation and pioneer new product lines.
- Financial Performance: While Apple’s stock price has performed well under Tim Cook’s leadership, the author points out that revenue growth has stagnated, and capital expenditures have decreased, indicating a need for more strategic investments.
- Services Growth Plateau: Apple’s Services group, which has been a source of growth, is reaching a point of plateau, and the company needs new product innovations to drive future growth.
In conclusion, the author believes that Apple’s efforts to develop its own 5G modem have been misguided and that the company should redirect its resources toward innovation in new product categories. They argue that a change in leadership is necessary to achieve this transformation and restore Apple’s position as a visionary leader in technology.
