Apple is moving further away from relying on Intel, according to new report (INTC)

Tim Cook

Another cloud could be hanging over Intel's head as reports circulate that Apple will not be buying Intel's 5G modem chips.
Intel just last month said it was mass producing a new 4G modem chip scheduled to be used in Apple's next-generation iPhone introduced in 2019.
But a new report indicates that Apple has already told Intel it won't be buying the following generation of modem chips, which has put the future of that chip in question.

Apple has reportedly informed Intel that it will not be buying Intel's 5G modem chips for iPhones planned for 2020, according to Israeli news site CTech.

Apple's decision has caused Intel to halt development of the chip, internally called "Sunny Peak,” CTech also reports. Neither Intel nor Apple confirmed this report to CTech, although an Intel spokesperson did send a comment to Business Insider (emphasis is from Intel), saying, "Intel’s 5G customer engagements and roadmap have not changed for 2018 through 2020. We remain committed to our 5G plans and projects."

Still, there's been ongoing speculation for months about Apple pulling away from Intel. In April, a short-lived job listing spotted on Apple's site was looking for a PhD to work on a wireless chip, indicating Apple was at least exploring the idea of doing this chip in-house.

An in-house 5G chip, created with Apple's own technology, could possibly help Apple with its feud with Qualcomm, in which Apple is suing Qualcomm over what Apple claims is exorbitant royalty fees. If Apple were to make its own chip, it wouldn't need to buy chips from Qualcomm, as it currently does for the majority of iPhones, but may still need to pay licensing fees depending on the result of the legal battle.

Apple has since turned to Intel for LTE chips for its 2019 models and Intel has just started mass production of an important new modem chip slated to be used in Apple's next, new iPhones, one of the company's vice presidents, Asha Keddy, told Japanese business news site last month, Nikkei Asian Review.

The new chip, the XMM 7560, is the first Intel modem chip that could hit 1 gigabit speeds, necessary for 5G.

Keddy admitted that Intel has a "late start" in this market and believes the company was now on track to be a leader in 5G. However, Nikke also cited a research note from long-term Intel bear, Stacy Rasgon of Bernstein Research, which questioned the chip's quality control and believed the chip would not become Apple's 100% go-to choice.

And last month a Goldman Sachs analyst wrote a research note indicating that Apple planned to tap a new supplier, MediaTek, for 5G chips, Bloomberg reported.

This is all after word broke in April that Apple was moving away from Intel by developing its own chips to use in its Mac PCs, too, to be used in its products by 2020. Apple has been gradually building up its chip design capabilities in recent years as it seeks to control as many aspects of its products as possible, from software to hardware to services.

On the other hand, designing your own chips and getting them mass produced in the quantities that Apple needs is not an easy thing, either.

Still, all of this is another cloud hanging over Intel's head as its board searches for a new CEO, after Intel's former CEO Brian Krzanich, suddenly and unceremoniously resigned. Intel's board said Krzanich's departure was because he was found to have had an affair with an Intel employee that began before he was CEO and had previously ended.

Apple did immediately responded to a request for comment.

Join the conversation about this story »

NOW WATCH: What would happen if America's Internet went down