The end of a legal battle between Apple Inc and Qualcomm Inc, as well as Intel Corp’s exit from the 5G smartphone modem business, would have a positive effect on Taiwan’s tech industry, Yuanta Securities Investment Consulting Co (元大投顧) said.
Intel’s exit and Qualcomm’s re-entry into Apple’s modem chip supply chain are expected to increase the chances that Apple would launch 5G iPhones next year, which would benefit Taiwanese semiconductor companies, printed-circuit board (PCB) manufacturers and firms in Apple’s supply chain in general, Yuanta analysts led by Vincent Chen (陳豊丰) said in a report on Thursday.
Modem chips for 5G are small chips that manage data connections and transfers between smartphones and cell towers.
Apple and Qualcomm on Tuesday announced that they had reached a settlement to dismiss all litigation related to their battle over 5G modem patent royalties.
Included in the terms of the settlement were a six-year licensing agreement and a multiyear chipset supply agreement.
Meanwhile, Intel announced that it was shifting its business focus to 5G network infrastructure rather than modem chips.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major supplier of chips for Apple’s latest iPhone series, is likely to benefit the most from the developments, the analysts said.
“TSMC will benefit from Qualcomm’s next-generation 5G modem orders for Apple,” they wrote.
“Assuming 80 million and 160 million units of iPhones are equipped with 5G chips, that would bring in US$450 million and US$900 million in sales for TSMC in 2020 and 2021 respectively,” the analysts wrote.
Other Taiwanese Apple suppliers are also likely to see increased shipments due to the launch of 5G iPhones, they said.
Flexible PCB makers, such as Flexium Interconnect Inc (台郡), and gallium-arsenide foundry makers of power amplifier (PA) chips, such as Win Semiconductors Corp (穩懋), were likely to benefit from increased contributions toward iPhone assembly in terms of more flexible PCB pieces and PA units, the report said.
As improved antennas are required for 5G iPhones compared with 4G models, more intricate interior casing designs are required, along with upgrades to heat dissipation specifications, which would lead to higher demand for Catcher Technology Co’s (可成) light-metal casings, it said.
With the end of its years-long legal dispute with Apple, Qualcomm announced that it had reconciled with four major Taiwanese contract makers for Apple products: Hon Hai Precision Industry Co (鴻海精密), Pegatron Corp (和碩), Compal Electronics Inc (仁寶) and Wistron Corp (緯創), which had been accused by the company of not paying license fees.
“We view this as a neutral event for these manufacturers, as the license fees should have been paid by Apple rather than the supply chains in the first place. Therefore, the settlement should have no impact on the fundamentals of these manufacturers,” the Yuanta analysts said.
ASE Technology Holding Co (日月光投資控股), the world’s largest integrated-circuit (IC) packaging and testing services provider, would also not be affected by the developments, as it takes packaging orders from Intel and Qualcomm, they said.
The implications for MediaTek Inc (聯發科), the nation’s largest handset chip designer, would likely be mixed, they said.
MediaTek’s chances of supplying 5G modem chips for iPhones have been reduced after the settlement, as Qualcomm is a major rival, but Intel’s exit from the 5G modem business essentially eliminates one competitor, while Qualcomm would have to allocate more resources to develop high-end modems for Apple and other flagship handset models, creating more opportunities for MediaTek in the mid to low-end market, they said.
However, Intel’s withdrawal would negatively affect IC testing service provider King Yuan Electronics Co (京元電), which owns all of Intel’s modem wafer testing business, the analysts said.
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