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More Evidence That Apple Inc. Is Building Its Own Cellular Modem

Today, Apple (NASDAQ: AAPL) relies on third parties to supply it with cellular modems for its popular iPhone line of smartphones -- wireless giant Qualcomm (NASDAQ: QCOM) and microprocessor giant Intel (NASDAQ: INTC).

Apple is also the only major smartphone manufacturer left that uses standalone modems. Other smartphone vendors use either integrated applications processor and baseband solutions from third parties (e.g., Qualcomm) or make their own integrated parts (e.g., Samsung (NASDAQOTH: SSNLF) and Huawei).

Image source: Apple.

In perusing Apple's job boards, I came across some new evidence that might suggest that Apple has built, and continues to augment, an in-house team dedicated to cellular modem development.

Here's what Apple wants

On Apple's job board, the company says it's looking for a "Sr. Digital IC (PHY) Design Engineer." Under the "job summary" section of the listing, Apple says the individual chosen for this position "will be part of a silicon design group responsible for digital baseband logic design in state-of-the-art wireless ICs."

That's not the only related listing on the company's job board. Apple also has multiple positions related to RFIC design and layout. RFIC stands for "radio frequency integrated circuit."

In another listing -- this time for a "Sr. RFIC Design Engineer" -- Apple says whoever fills the position "will be at the center of a wireless SoC [system-on-a-chip] design group."

"You will have a critical impact on getting Apple's state-of-the-art radios into hundreds of millions of products," the listing continues.

That last line has me thinking Apple isn't just planning to put its wireless chips into low-volume devices; it truly seems to be gunning to get this technology into an iPhone as Apple's iPhone product category is the only one that'd require a "state-of-the-art wireless SoC" and ships in the "hundreds of millions" of units annually.

Intel and Qualcomm likely to get the boot

Over the long term, I would not be surprised to see Apple phase out the modems from both Qualcomm and Intel.

Building wireless chips is both tricky and risky, so I would truly expect it to be a gradual phase-out rather than an overnight dropping of third-party suppliers.

Such an effort on Apple's part could begin with Apple itself building a standalone modem solution that it would source for its iPhone models in addition to chips from both Qualcomm and Intel. Then, over time, as Apple's internal team successfully delivers multiple generations of viable standalone modems, Apple could simply stop using Intel and Qualcomm altogether.

Then, in a few more generations -- again, assuming Apple's efforts up to that point are successful -- Apple could look at higher levels of integration, such as including the digital baseband processor in future A-series products. Such a move would give Apple more control over its long-term future, potentially improve power efficiency and reduce the physical board space required to implement future iPhones and other cellular-capable Apple products.

That could mean more feature-packed iPhone models for Apple's customers, as smartphones are ultimately space and power constrained.  

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Ashraf Eassa owns shares of Intel and Qualcomm. The Motley Fool owns shares of and recommends Apple. The Motley Fool owns shares of Qualcomm. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.