Is Apple Building Its Own Wireless Chips?

The evidence is too difficult to ignore; Apple's staffing up to build its own wireless chips - potentially cutting out Qualcomm and Broadcom longer term.

Jan 14, 2014 at 9:00PM

Apple (NASDAQ:AAPL) is the world's largest, most successful consumer electronics company. The company single-handedly revolutionized the cell-phone industry, refined and redefined the "tablet" category, builds (arguably) the world's best PCs, and has one heck of a silicon development team responsible for its "A-series" of chips. The company develops world-class SoCs with leadership IP, much of it custom (and increasingly so).

However, there's one piece of IP that Apple doesn't appear to have today: a cellular modem/baseband. This is a curious omission for a company for whom 52% of sales comes from the sale of cell phones, and an even more curious omission given the strength of the rest of its silicon teams.

How about modems?
What's interesting is that Apple doesn't design its own modems -- in fact, it buys off-the-shelf discrete modems while the rest of the merchant chip industry (as well as the players that build their own chips, such as Samsung) continues to integrate cellular basebands into their mobile system-on-chip products. In short, Apple seems to be the only company that designs apps processors that does not also have modem capability.

Now, given that Apple has demonstrated that it can build world class SoCs and absolutely monstrous CPU cores, it only seems logical that Apple also has internal efforts dedicated to the development of its own modem IP. Why? It's simple: As long as Apple continues to use discrete modems, it will be at a material disadvantage against competitors like Samsung, HTC, and others from both a BoM and a power/board space perspective. It needs to integrate its own modems at some point down the line or risk simply needing to exit the chip-development business for its phones entirely.

Why Apple won't stop designing its own chips
Apple likely has two options: Get some in-house modem action or simply exit the chip business. It is unlikely at Apple intends to exit the chip business considering how aggressively it hires chip designers:



As you can see, Apple has 60 job openings pertaining to CPU design alone -- let alone the rest of the SoC! So, clearly Apple is very committed and focused on developing its own applications processor for a while longer. This suggests to me, then, that Apple has no choice but to do its own modem.

Why is Apple hiring so many RF IC architects?
A look at the job board over at Apple shows that Apple is hiring plenty of RF IC engineers, too:



Apple is apparently hiring folks to build both an RF front end and a RF transceiver. It wouldn't make sense for Apple to do RF front end/transceiver and to not go all of the way to build its own cellular baseband for integration onto the A-series SoCs.

It looks like Qualcomm's (NASDAQ:QCOM) days could be numbered inside of the iPhone and this makes it increasingly unlikely that Intel's wireless division (or Broadcom's, or anybody else's) has any chance of gaining any content share within the iPhone (if Apple does indeed develop and integrate a cellular baseband). Now, before you go ahead and say that Apple "can't" do it, understand the following:

  • Apple has one of the best silicon design teams in the world
  • Apple has a lot of money
  • Every other mobile SoC vendor, even ones far weaker than Apple, have their own cellular baseband and RF effort
  • Apple ships an absolutely enormous number of smartphones, more than justifying the need to stop handing over margins to Qualcomm and others

Apple ships about 150 million iPhones per year with Qualcomm's baseband content estimated at somewhere between $15-$20 per phone-implying a roughly $2.25-$3 billion business that Apple could cease giving to Qualcomm (and could be realized as a significant gross margin savings).

More compelling ideas from The Motley Fool
Opportunities to get wealthy from a single investment don't come around often, but they do exist, and our chief technology officer believes he's found one. In this free report, Jeremy Phillips shares the single company that he believes could transform not only your portfolio, but your entire life. To learn the identity of this stock for free and see why Jeremy is putting more than $100,000 of his own money into it, all you have to do is click here now.

Ashraf Eassa has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers