5G chips may be the most important part of the 5G era.
This could be the fastest reconciliation
The patent lawsuit between Apple and Qualcomm concerning semiconductors for smartphones was formally accepted on April 15 , 2019 , in the U.S. District Court for the Eastern District of California, San Diego. However, the two parties reached a settlement the following day , April 16 .
The lawsuit stemmed from Apple's belief that Qualcomm's patent royalty demands were extremely unreasonable, leading Apple to sue Qualcomm for $9 billion in damages under antitrust law.
On the other hand, Qualcomm has filed lawsuits against Apple both in the US and overseas, alleging that Apple infringed on Qualcomm's intellectual property rights. In March 2019 , an adjudicator at the US International Trade Commission upheld some of Qualcomm's claims and imposed a ban on certain Apple products entering the US market. Apple's legal battles with Samsung have been protracted over the past seven years, and it seemed likely that the Apple-Qualcomm legal battle would follow a similar pattern. However, surprisingly, Apple and Qualcomm reached a settlement in just one day, perhaps the fastest settlement ever recorded.
Following the settlement, Apple will pay Qualcomm $ 4.5-4.7 billion in licensing fees over the next six years, and Qualcomm will supply Apple with communication semiconductors for the following years. This allows Apple to develop 5G iPhones, and Qualcomm successfully wins Apple back as a customer from Intel. It's a win-win situation for both companies.
However, the fact that "Apple and Qualcomm have reached a settlement" shows us the important role of 5G chips in the future.
Intel's stock price actually rose after the settlement!
Those who hold Qualcomm and Intel stock were overjoyed upon hearing the news of the settlement. Why? After the settlement, both Qualcomm and Intel stocks surged. This raises a question: Qualcomm's surge is undeniable, but why did Intel's stock also rise? After all, Qualcomm was poised to take away a major customer like Apple.
Because 5G , with its high-speed, low-latency wireless communication , uses millimeter waves and requires extensive knowledge of wireless communication, even companies currently engaged in 4G communication semiconductors cannot easily develop 5G .
Furthermore, although Intel has been supplying 4G communication semiconductors to Apple since 2016 , Intel's core business is still primarily PC processors. Therefore, Intel faces significant challenges in developing a truly advanced 5G platform . This is likely a major reason why Apple had to settle with Qualcomm.
In conclusion, from a technical standpoint, 5G chip development has been extremely difficult for Intel. Now that Apple has settled with Qualcomm, there's no longer a need for such burdensome research, which is likely the reason for Intel's stock price increase.
Furthermore, Intel's 14nm fabs have been operating at full capacity because they need to produce communication semiconductors for Apple . This has resulted in a persistent shortage of Intel's desktop processors, leading to an oversupply of DRAM/NAND flash memory and a subsequent price crash.
Therefore, with Apple settling with Qualcomm, Intel no longer needs to manufacture communication semiconductors for Apple, and the sluggish flash memory market will begin to improve. This is great news for memory manufacturers.
Is it possible that Huawei will sell 5G chips to Apple ?
On April 16 , Huawei's rotating CEO , Hu Houkun, told foreign media that Apple should not be absent from 5G , and that Huawei's 5G chips adhere to a path of cooperation and openness. In other words, Huawei can sell 5G chips to Apple.
Currently, only Qualcomm and Huawei's HiSilicon can provide 5G chips. Fortunately, Apple settled with Qualcomm early on; otherwise, if the lawsuit had remained unresolved, Apple would have been very likely to purchase 5G chips from Huawei.
However, the United States enacted the National Defense Authority Act on August 13 , 2018. The National Defense Authority Act was implemented in two phases. After August 13 , 2019 , five companies, including Huawei, were prohibited from transacting with U.S. government agencies .
Therefore, if Apple adopts Huawei's 5G chips, it means that Apple phones will be unable to enter the government system after August 13 , 2019 .
In addition, after August 13 , 2020 , other Apple products (tablets, laptops , etc.) that do not use Huawei's 5G chips will also be affected and will be unable to enter the US government system.
To avoid this situation, the United States excluded Huawei on security grounds. In short, due to US government intervention, Qualcomm was left as the only option for Apple.
The main focus is still on chips.
Currently, only Qualcomm and Huawei's subsidiary HiSilicon have successfully developed 5G chips. To sell 5G phones, we can only rely on these two. Therefore, the bottleneck for the most advanced smartphones lies in the chip.
Furthermore, the fact that Apple was forced to settle with Qualcomm demonstrates that in the most advanced semiconductor technology, whoever holds the patents has the power.
According to data from the German patent data company IPlytics, as of March 2019 , China held a 34.02% share of 5G-related patents , more than double that of the United States. Further breakdown shows that China's Huawei ranked first ( 15.05% ), ZTE fourth ( 11.7% ), while the US had Qualcomm ( 8.19% ) and Intel ( 5.34% ).
Although the United States has restricted five Chinese companies, including Huawei, through the National Defense Authorization Act, Huawei and ZTE possess a large number of 5G patents. Even if their products cannot be sold in the United States, they can still collect patent royalties from the United States every year.
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