Track Hyper | iPhone SE 4: Qualcomm's loss of Apple's beginning

Author: Zhou Yuan / Wall Street News

iPhone SE 4 is coming, with a preliminary release scheduled for spring 2025.

The biggest feature of this model is not its low price, but the fact that Apple's self-developed 5G Modem will be used in this model, making it the first model to truly surpass Qualcomm's modem chips.

According to exclusive information from the supply chain obtained by Wall Street News, Apple's self-developed 5G Modem was completed around mid-July this year and will soon be used in the iPhone SE 4.

Apple's self-developed 5G Modem was expected to be significantly developed after the acquisition of most of Intel's smartphone modem business in 2019.

The confirmation of the production time and model equipped with Apple's self-developed 5G Modem indicates that Apple has truly taken a substantial step towards reducing external dependencies, as well as the latest major achievement in Apple's efforts to control long-term costs and promote technological self-reliance.

In fact, original hardware technology has never been Apple's strong suit. Although Apple achieved independent design of A-series and M-series chips early on, it has long struggled with radio frequency chip design technology, giving Chinese competitor Huawei the opportunity and space to erode Apple's empire in high-end smartphones.

For well-known reasons, Huawei was unable to compete directly with Apple for about four years, while Apple "coincidentally" began large-scale RFIC design work in 2019, seizing the opportunity with precision timing. Despite starting this work early, Apple faced repeated setbacks and had not been able to realize the grand vision of 5G modem independence from external suppliers.

The difficulty of RFIC design, as described by Apple's hardware technology department head Johny Srouji, is "extremely challenging." This statement indicates the crucial role that modems play in mobile communication experience, particularly in ensuring network connectivity stability and data transmission efficiency.

It is evident that Apple is not yet confident in the technical capabilities of its own 5G Modem, hence the choice of the relatively low-priced iPhone SE 4 for initial validation. If testing goes smoothly, the iPhone 17 series to be launched in the third quarter of 2025 will also be equipped with this self-developed modem chip.

If this indeed happens, the long-standing issue of poor signal quality in Apple's iPhone series will no longer exist, or at least there will be a noticeable improvement in communication experience.

Currently, all iPhones on the market use Qualcomm's modems. By 2023, Apple had incurred a cumulative cost of approximately $7.2 billion due to this dependency. Earlier this year, Apple extended its agreement with Qualcomm for 5G Modem supply until 2026. Therefore, the replacement of Qualcomm chips with Apple's self-developed 5G Modem is likely to be phased in gradually.

Qualcomm became Apple's exclusive modem supplier in 2011. As part of the agreement, Qualcomm pays Apple $1 billion in "incentive payments" annually, and if Apple adds other suppliers, it must repay this money. After Tim Cook became Apple's CEO, he stated that Apple was forced to bundle with Qualcomm due to their cooperation Apple's "rebellion" against Qualcomm began with the launch of the iPhone 7 series on September 7, 2016. In this model, Apple chose Intel's modem. At the same time, Apple initiated a patent lawsuit against Qualcomm in 2017.

However, due to Intel's modem performance being inferior to Qualcomm's, Apple faced criticism from users for communication experience issues, such as only supporting 4G after the iPhone 7 series, including the iPhone 11 series.

On April 17, 2019, Apple reached a settlement with Qualcomm by paying a $4.5 billion compensation fee and signing a six-year modem chip supply agreement.

Despite the defeat in resisting Qualcomm's technological advantage due to inferior technology, Apple's technical efforts never stopped.

On July 26, 2019, Apple announced the acquisition of Intel's smartphone modem business. This was the second-largest acquisition in Apple's history.

Under the agreement, Apple would acquire approximately 2,200 employees from Intel, along with related intellectual property, equipment, and leases. The deal was valued at $1 billion, allowing Apple to continue advancing its self-developed 5G modem chip technology.

Through this acquisition, Apple obtained over 17,000 wireless technology patents, covering areas from cellular standard protocols to modem architecture and modem operations.

Although TF International Securities analyst Ming-Chi Kuo predicted that Apple would use its self-developed 5G Modem on the iPhone 15 series to be launched in 2024, a new agreement was reached between Apple and Qualcomm in September 2023, a year before the launch of the iPhone 15 series: Qualcomm would provide Snapdragon 5G modem and RF systems for Apple's smartphones to be launched in 2024, 2025, and 2026, making Kuo's prediction inaccurate.

On August 1 this year, Wall Street learned from the supply chain that Apple's self-developed 5G Modem has entered mass production and is highly likely to be used in the iPhone SE 4 to be launched in the spring of 2025.

Qualcomm's exclusive supply of Apple's modem will thus mark the end of history