Earlier this week, wireless giant Qualcomm (NASDAQ:QCOM) announced its very first 5G-capable cellular modem, known as the Snapdragon X50. The modem, per Qualcomm, is expected to begin sampling to customers during the second half of 2017; devices incorporating the modem are expected to arrive in 2018.
Although Qualcomm has several peers and competitors that develop cellular modems, the company's most important competitor in the world of stand-alone modems (that is modems that aren't integrated with the main applications processor) is Intel (NASDAQ:INTC).
Indeed, investors are likely aware that for the first time in years, Qualcomm is sharing the stand-alone modem spot inside the recently released iPhone 7 series smartphones with Intel.
There's little doubt going forward that Qualcomm will have the right modem technologies to continue to win some portion of Apple's iPhone business. However, what remains to be seen is whether Intel will be able to keep pace, particularly as the industry transitions to 5G.
Intel is still a technology laggard
In the world of cellular modems, Intel is very much a technology laggard; the XMM 7360 that Intel supplies to Apple is significantly behind the MDM9645 modem that Qualcomm is selling to Apple in support of the iPhone 7.
Indeed, Apple had to limit what cellular download speeds it could advertise with the iPhone 7 to just 450 megabits per second because that's as far as the XMM 7360 goes; MDM9645 can handle up to 600 megabits per second download speeds.
Had Apple advertised upload speeds, it would have again been forced to limit what it could advertise because of the Intel modem; XMM 7360 is limited to 100 megabits per second upload speeds while MDM9645 can handle up to 150 megabits per second.
In fact, it doesn't appear that Intel's next generation modem, XMM 7480, will even catch up to MDM9645. With XMM 7480, Intel says that peak download speed stays at 450 megabits per second, with the main improvement being an increase in peak upload speeds from 100 megabits per second to 150 megabits per second. For some perspective, the MDM9645 isn't even Qualcomm's best modem -- it's a generation behind Qualcomm's currently shipping Snapdragon X16 modem.
Intel needs to narrow the gap, lest it fall behind in the 5G era
It's not realistic to expect Intel to catch up to Qualcomm in terms of modem performance anytime soon. Qualcomm's leadership is significant and, if anything, Qualcomm appears to be distancing itself technologically from Intel.
What Intel is going to need to do, though, is to make sure that the gap doesn't get any wider so that it can continue to win modem share inside of future iPhones. Apple hasn't historically been an early adopter of bleeding edge modem technology, but Apple can't afford to be shipping "4G-only" smartphones once the major carriers start bringing 5G networks online.
If Intel can deliver credible 5G solutions once 5G is relevant to the masses, then it should be able to continue to fight for share inside of future iPhones. If the company shows up late to the game (as it was with 4G LTE solutions), then its success at Apple may be short-lived.