Over the years, Apple (NASDAQ:AAPL) has brought the development of key technologies in-house in a bid to differentiate its products. Apple now develops all of the high-value portions of its A-series applications processors that power its iPhone and iPad lineup rather than relying on third-party chipmakers or even third-party technologies for integration into its chips.
Going forward, though, the tech titan is likely going to want to bring additional technologies in-house. Here are three technologies that Apple could take in-house in the not-so-distant future.
1. Power management chip
Today, Apple's iPhones include a power management chip that's designed to Apple's specifications by a company called Dialog Semiconductor (NASDAQOTH:DLGNF). There have been rumors swirling around for months suggesting that Apple intends to design its own power management chips.
Apple's internal power management chips, according to Nikkei Asian Review, are expected to be "the most advanced in the industry," and "could have processing capabilities that allow it to better monitor and control power consumption among various components."
Now, Dialog Semiconductor's CEO recently said (via Reuters) that Apple tasked Dialog with developing chips "for many devices for 2019 and 2020." What this suggests is that Dialog's position within Apple's devices is likely reasonably safe through 2020, but there seems to be a significant likelihood that beyond that time, Apple will switch over to using its own power management chips in its key products.
2. Display drivers
Every iPhone includes a chip known as a display driver integrated circuit (DDIC). A display driver is a critical component that has a substantial impact on the quality of the images rendered on a mobile display.
Apple is believed to source the display driver chips for its iPhones with liquid crystal displays, like the iPhone 8 series devices, from Synaptics (NASDAQ:SYNA). A teardown report from TechInsights reveals that Samsung (NASDAQOTH:SSNLF) supplies the display driver for the iPhone X.
According to a recent Bloomberg report, Apple is working on its own display driver chips for future MicroLED-based displays (MicroLED is the technology that Apple is betting on to succeed organic light emitting diode, or OLED). There were rumors swirling for a while beforehand, though, that Apple was working on its own display driver chips for LCD-based (and possibly OLED-based) iPhones as well, so both Synaptics and Samsung are at risk of losing Apple's display driver chip business over the long term.
Such a loss wouldn't affect Samsung much (display driver chip sales are a small part of its overall business), though Synaptics would likely be significantly impacted, as display driver chip sales make up a significant portion of its overall business.
3. Cellular chips
Today, Apple sources cellular modems and related components from Qualcomm (NASDAQ:QCOM) and Intel (NASDAQ:INTC). Qualcomm's share of iPhone modems has decreased in recent years as Intel has gained traction at Apple, and Intel is even believed to be the sole modem vendor for Apple's upcoming iPhone models.
That being said, Apple is the only major smartphone vendor left that uses stand-alone cellular modems. Stand-alone modems have several disadvantages compared to modems integrated directly into the applications processor, such as a larger footprint on the smartphone's logic board as well as higher potential power consumption.
Apple may eventually want to integrate the cellular modem functionality into its A-series applications processors -- something that'd likely require the company to design its own modem technology. Developing modems, especially ones that'll work on the wide range of networks that Apple's iPhones need to work on, is an exceptionally hard endeavor, but if the tech titan sees significant value in integrating the modem into its applications processor, it'll probably cut both Intel and Qualcomm out for good.
Ashraf Eassa owns shares of Intel and Qualcomm. The Motley Fool owns shares of and recommends Apple. The Motley Fool owns shares of Qualcomm and has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.