Intel's Communications Gamble Takes a Blow

Intel’s partnership with Apple was a source of pride for multinational chipmaker. This was clearly evident in conversations with Intel executives, whose chests would swell with pride at the mention that Intel was on the track to become Apple’s exclusive modem supplier for future iPhone models.

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Securing the Apple contract was a significant achievement, especially considering that Intel was late to enter the field of communication chips and that Apple was its first considerable customer. Working with Apple was a seal of approval for Intel’s modems, and one of the most significant achievements credited to Brian Krzanich, who recently stepped down as Intel’s CEO.

Apple’s decision to drop Intel in favor of other providers could influence other existing and potential clients.

Apple's snub is not the first time that the quality of Intel’s chipsets have been called into question. Independent tests conducted on recent iPhone models showed that the maximum web browsing speeds on iPhones containing Intel modems were slower compared to iPhones containing Qualcomm chipsets. Reports that Apple chose to continue using Intel chipsets in 2018 helped subdue criticism. Now, Apple’s snub will likely raise it again.

Intel will have to work hard to demonstrate to Apple and the rest of the tech world that what it is experiencing is nothing but a momentary lapse and that its investment in communication chips was more than just an ill-fated gamble.

Intel could certainly pull it off. Apple has a history of dropping providers only to embrace them again later. It is not a company known to be influenced by sentiment—in one notorious case, Apple decided to cut a provider which developed a specialized glass for iPhones after the company had already invested millions in a new facility. As a result, that company shut down the facility, laid off hundreds of employees, and went bankrupt.

In a way, Apple’s sentiment-free approach is good for Intel. If the company’s future chipsets are good enough, Apple will embrace them despite its current failure. All Intel has to do is be the best chipmaker around.