Intel announced late on Tuesday that it would no longer make 5G modem chips for phones. The company had been working on 5G chips for Apple, but the chips were not expected to arrive until 2020 at the earliest.
Prior to the decision to scrap its 5G phone modem business, the company reportedly faced various heat dissipation issues while developing the 5G chips, impacting the battery life it could provide.
“We are very excited about the opportunity in 5G and the ‘cloudification’ of the network, but in the smartphone modem business it has become apparent that there is no clear path to profitability and positive returns,” Intel CEO Bob Swan said in a statement.
“The company will continue to meet current customer commitments for its existing 4G smartphone modem product line, but does not expect to launch 5G modem products in the smartphone space, including those originally planned for launches in 2020,” Intel said.
The announcement follows Apple and Qualcomm reaching a settlement earlier in the day over their legal dispute regarding licensing royalties. The two battling companies also agreed to a six-year license agreement, effective April 1, as well as a surprise multi-year chipset supply agreement.
Intel’s decision leaves Qualcomm as the sole supplier of chips for Apple’s iPhones. Apple makes its own applications processors, but relies on third parties to make modem chips for network connectivity.
According to ZDNet’s sister site CNET, an Intel spokesperson declined to comment on whether the decision behind Intel’s exit occurred before the settlement or was in response to the new agreements between Apple and Qualcomm.
Intel also added: “5G continues to be a strategic priority across Intel, and our team has developed a valuable portfolio of wireless products and intellectual property. We are assessing our options to realize the value we have created, including the opportunities in a wide variety of data-centric platforms and devices in a 5G world.”
Intel said it would provide additional details about its upcoming 5G strategy in the first-quarter 2019 earnings to be released on April 25.
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The companies also came to six-year license agreement, effective April 1, as well as a multiyear chipset supply agreement.
The Cupertino company says Qualcomm withheld payments it owed as a means of retaliation for Apple’s cooperation with South Korean investigators.
While smartphone providers like Samsung and Motorola have already announced plans for 5G phones, Apple lags behind.
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