Huawei May Sell Its Balong Chips to Apple

Currently, Apple is finding the provider of its 5G baseband chips and Huawei might be the only choice of Apple.

In April 2019, the 5G version of Samsung Galaxy S10 began to sell and the 5G network began its commercialization in South Korea. Other mobile phone manufacturers including Huawei and Xiaomi also published its 5G phone in the MWC summit. However, Apple, as a mobile phone manufacturer without the baseband chip technology, can do nothing to deal with the competition from other players. According to ChinaTimes from Taiwan, Apple used to purchase the 5G baseband chips from Samsung and Qualcomm but was refused by them. Intel, another manufacturer of 5G chips, however, announced that it would provide the 5G baseband chip – XMM8160 to its customers on time. But some media reports that because the previous unhappy cooperation, Apple has already lost confidence to Intel.

According to the Engadget’s report on April 8, 2019, Huawei opened to sell its 5G modem, but only to apple. Both Huawei and Apple refused to reply to this news. However, purchasing 5G chips from Huawei might be the only way for Apple except develop the baseband chip by itself.  Prior to this, Huawei kept stating that all of its mobile phone chips were solely applied to Huawei’s mobile phones and would never sell to other brands.

We believe that if the transaction is confirmed, it would be a win-win end for both Huawei and Apple. Without the technology to make the baseband chips, Apple may lose its competitiveness in the time while 5G technology would dominate. For Huawei, once apple purchased its 5G baseband chips, it would be a great opportunity for Huawei to gain the market share in the U.S. and would also be an important chance for Huawei to promote its overseas brand influence.

Currently, only Qualcomm, Samsung, Huawei and MediaTek has the ability to produce the baseband 5G chips, and Intel and Apple are still developing its own 5G baseband chip. The Intel production would be massively produced in the second half of 2019, and it is estimated that Apple’s production would be published in 2020. Taking the testing process into consideration, the time when Apple’s 5G baseband chip can apply to iPhone would be later than 2020. According to the analyst from UBS, Apple may publish the 5G version iPhone in 2021. Due to the violent competition in the mobile phone industry, any time delay would lead to the loss of market share for the iPhone. In terms of the hardware, it is hard for Apple to catch up with the latest technology such as photography, screen (especially the fordable screen), etc. It might be a better way for Apple to buy the 5G baseband chips directly.

Apple used to announce that it would not purchase Intel’s 5G chips any longer. For one thing, the iPhone XS, which is the latest model of iPhone, faces a lot of problems because of the unstable quality of Intel’s chips. For another, the research and development of Intel are lagging. In this way, purchasing Huawei's chip might be the most convenient way for Apple to catch up with the latest technology of mobile phone.