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Apple ( AAPL ) says C1 subsystem will give iPhones longer battery

life

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Apple ( AAPL ) plans to use its own modem chips across more devices

in

coming years

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Qualcomm ( QCOM ) expects share of Apple ( AAPL ) modems to drop to 20% by

2026

By Stephen Nellis

SUNNYVALE, California, Feb 19 (Reuters) - Apple ( AAPL )

on Wednesday revealed its first custom-designed modem chip that

will help connect iPhones to wireless data networks, a move that

will make the company less reliant on chips from Qualcomm ( QCOM )

that also power its Android rivals.

The chip will be at the heart of Apple's ( AAPL ) $599 iPhone 16e

unveiled on Wednesday. Apple ( AAPL ) executives told Reuters these chips

will roll out across all of its products in the coming years but

did not give details on the timing.

The chips are part of a new collection of components Apple ( AAPL )

calls the C1 subsystem. A subsystem houses key components like

processors and memory.

The iPhone 16e, which will feature the same A18 processor

chip as the rest of its iPhone 16 lineup, has the best battery

life of any of its 6.1-inch phones thanks to the C1 system,

Apple's ( AAPL ) Kaiann Drance, vice president of iPhone product

marketing, told Reuters. The iPhone 16e will also have Apple's ( AAPL )

latest artificial intelligence features, Drance said.

Modem chips are hard to make because they must be compatible

with hundreds of carriers in scores of countries. Only a handful

of companies around the world including Samsung Electronics ( SSNLF )

, MediaTek ( MDTTF ) and Huawei Technologies

, have successfully created one.

For years, Apple ( AAPL ) sourced modems from Qualcomm ( QCOM ), the world's

biggest supplier of the chips. Qualcomm ( QCOM ) chips also power Android

gadgets and Windows laptops that compete with Apple's ( AAPL ) devices.

Apple ( AAPL ) fought a protracted legal battle with Qualcomm ( QCOM ) but

ultimately settled and signed new supply agreements with it in

2019 after alternative suppliers such as Intel ( INTC ) failed

to deliver a viable alternative.

But Apple ( AAPL ) is now confident it has created an advanced chip

that will form the basis of a modem platform Apple ( AAPL ) will use for

years to come.

NEW PLATFORM WITH GLOBAL COMPATIBILITY

The C1 subsystem is the most complex technology Apple ( AAPL ) has

ever built, with a baseband modem manufactured with advanced

4-nanometer chipmaking technology and a transceiver made with

7-nanometer technology, Johny Srouji, Apple's ( AAPL ) senior vice

president of hardware technologies, said in an interview at one

of Apple's ( AAPL ) silicon labs in Sunnyvale, California.

The chips had to be tested with 180 carriers in 55 countries

to ensure they will work in all the places Apple ( AAPL ) ships iPhones.

"We build a platform for generations," Srouji said. "C1 is

the start, and we're going to keep improving that technology

each generation, so that it becomes a platform for us that will

be used to truly differentiate this technology for our

products."

One of the way Apple ( AAPL ) hopes the C1 will set its iPhones apart

is by tightly integrating it with its processor chips.

For example, if an iPhone encounters congested data

networks, the phone's processor can signal to the modem which

traffic is the most time sensitive and put it ahead of other

data transfers, making the phone feel more responsive to the

user's needs, said Arun Mathias, vice president for wireless

software at Apple ( AAPL ).

The C1 chips also have custom GPS systems and satellite

connectivity for when iPhone users are away from mobile data

networks. But they will lack some features, such as the ability

to connect to what are known as millimeter wave 5G networks.

Millimeter-wave technology is one of Qualcomm's ( QCOM ) strongholds.

Apple ( AAPL ) executives declined to say when the company's chips will

have the technology or how quickly Apple ( AAPL ) will phase out

Qualcomm's ( QCOM ) chips.

Qualcomm ( QCOM ) executives have told investors they expect their

share of Apple ( AAPL ) modems to drop from its current 100% to as low as

20% by next year, though Qualcomm ( QCOM ) still has a technology

licensing agreement in place with Apple ( AAPL ) until at least 2027.

Apple's ( AAPL ) Srouji said that the company's goal was not to match

the specifications of its chip rivals but instead to design

products specific to the needs of Apple ( AAPL ) products.

"We're not the merchant vendor to go compete with Qualcomm ( QCOM )

and MediaTek ( MDTTF ) and others. I believe we're building something

truly differentiating that our customer will benefit from," he

said.