- As a direct result of its ongoing battle with Qualcomm, Apple is manufacturing 2018's iPhones and iPads to operate without Qualcomm's chips, The Wall Street Journal reported Tuesday.
- Apple will instead rely on either Intel or MediaTek for chips, though neither has yet reached the same capacity for download speed. Intel recently announced the development of a higher capacity chip, though its release and availability remains unknown.
- Allegedly, Apple seeks to always have two suppliers of vital iPhone components to empower its negotiating ability as part of the company's procurement standards. That means that not only Intel must quickly get up to speed but also MediaTek if the pair are to replace Qualcomm.
Conflicts with sole suppliers are always bad for business.
The Apple versus Qualcomm battle began over pricing and intellectual property, before growing into suspicion of collusion over withheld royalty payments to the chipmaker. As the conflict grew, it emerged that Apple itself was attempting to produce Qualcomm-style chips, adding an element of patent infringement to the squabble.
Apple has backed itself into a procurement corner and is now pressing alternative suppliers to up their game in order to provide the company with the level of technological sophistication it needs to remain the top seller. By engaging in battle with Qualcomm before ensuring an alternative producer of similar quality chips, it effectively stranded itself, having no alternative but to resolve matters with the top chipmaker or settle for second best with Intel. There's also the hope that Intel can successfully reproduce the speed with which Qualcomm chips operates, but to count on that outcome is to take a significant risk.
Given CEO Tim Cook's past in procurement, it's surprising that Apple now finds itself stuck between a rock and a hard place. By nixing Qualcomm's contributions to the iPhone, Apple's quality could decline. Regardless, the brand may suffer a hit if consumers believe Intel and MediaTek can't produce chips on par with Qualcomm.