Despite lawsuits, Qualcomm will still provide chips for 2018 iPhones

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Qualcomm
Qualcomm will share manufacturing duties with Intel.
Photo: Qualcomm

Breakups can be complicated. If you’ve built a life together, then extricating yourself from the other party isn’t necessarily as easy as ripping off a band-aid.

That’s a life lesson which applies to Qualcomm and Apple. Despite spending the last year-and-a-half feuding with one another, it seems that 2018-era iPhones are still going to rely on Qualcomm for a certain number of chips.

Because life is complex that way.

Not going ‘all-in’ on Intel

According to a new report from Fast Company, Intel will be supplying 70 percent of the modem chips for the next-gen of iPhones. Should all go well, that number will increase to 100 percent in 2019.

However, that still leaves a pesky 30 percent of modem chips for 2018. These will be supplied by Qualcomm, which has been supplying said chips since 2011.

While Apple would no doubt rather be rid of Qualcomm altogether, it’s remaining cautious. That is because 2018 is the first year that Intel makes its own chips using the 14 nanometer process. If there’s a yield problem, Apple doesn’t want to be left in the lurch, hence calling in some help from its ex.

Should Intel overdeliver, it could wind up producing more than 70 percent of the chips. If it underdelivers, Qualcomm could make up the shortfall. Intel’s production is set to kick off in June or July.

Interestingly, analysts aren’t factoring any future projections concerning Apple revenues into Qualcomm earnings. That doesn’t mean that the relationship is over; just that they’re not banking on the fact that this is a long-lived reunion.

Qualcomm and Apple: The story so far

Qualcomm and Apple’s feud began when Apple sued Qualcomm for allegedly withholding $1 billion in rebates in early 2017. This was the result of Apple assisting South Korean regulators investigating Qualcomm’s business.

Qualcomm then hit back at Apple by arguing that it was in breach of contract. The subsequent decision by Apple to withhold royalty payments to Qualcomm meant that Qualcomm was forced to revise its earnings forecasts to give a smaller number, due to Apple cutting off one of its major sources of revenue.

Apple’s manufacturers even got dragged into the fight, before things escalated even further — with Qualcomm attempting to ban iPhones being imported to the United States that use chips, “other than those supplied by Qualcomm affiliates.”

Last year ended with Apple and Qualcomm filing lawsuits and counter-lawsuits against one another. Qualcomm sought a ban on the import of all AT&T and T-Mobile iPhone X and iPhone 8 units in the U.S. Meanwhile, Apple claimed that Qualcomm was infringing on its patents by using Apple tech in its Snapdragon mobile phone chips.

On June 27 this year, Tim Cook will attend a deposition as part of Apple’s continuing legal battle with Qualcomm. Qualcomm recently announced that it will cut 1,500 jobs.