Apple Tests Smartphone Waters with Launch of Its Own Modem at Qualcomm’s Expense

In February 2025, Apple announced the iPhone 16e, a new budget addition to its latest lineup. The new phone is powered by its newest generation A18 processor chip, but of greater significance, it also uses the C1 5G cellular modem, the first designed by Apple. The C1 baseband is built using 4 Nanometer (nm) process technology and is designed from the ground up—from silicon to the radio systems to the firmware and software—which the company hopes will deliver more robust 5G cellular connectivity, enhanced performance, and greater power-efficiency than perhaps would have been achieved with other previously used modems.

After 6 years in the making, Apple has finally announced the first of its devices using its own-designed modem, which had been the one main element missing from its component strategy. Following Apple’s acquisition of Intel’s 5G modem business in 2019, the company has finally cracked one of the most challenging, extremely complex and expensive businesses of developing and building modems, which got even harder with the advent of 5G. Indeed, chip design is a high-risk game that even after massive amounts of investment and time spent can yield nothing in return. Moreover, entering the world of modems exposes Apple to a whole new environment, as it has to work closer with The 3rd Generation Partnership Project (3GPP) and mobile operators to ratify its modems, while working extensively with Radio Frequency (RF) vendors, building and harmonizing with the ecosystem.

During this time of development, Apple also implemented a patent license deal and a multi-year agreement with Qualcomm to supply smartphone modems for iPhones. This meant that Apple was able to take full advantage of Qualcomm’s 5G expertise and innovation in the short term, helping accelerate its move to 5G, while the Intel purchase enabled a more strategic long-term vision, allowing Apple to make full use of its inherited Intellectual Property (IP), while also creating 5G modem differentiation.

Interestingly, Apple took an unusually low-key approach to the launch of the iPhone 16e and its new modem, announcing the phone through a simple press release without the usual, typical fanfare. This is also a departure from the company’s usual strategy as it is the first time it has introduced new in-house technology in a lower-end device. Typically, Apple debuts proprietary technologies in high-end devices to showcase their innovation capabilities, which then trickles down to more budget products over time. In this instance, several concessions will have been made for Apple to reach such a lower price point, with cellular performance like to be one of them.

The benefits of using a custom modem are to provide better integration, power efficiency, and reliability. While it is likely the C1 modem is to have more efficient integration with its A18 processor and better battery life than perhaps could have been achieved through continued use of a Qualcomm modem, key to success will be if it can optimize overall cellular performance. Moreover, for Apple to create a fully integrated System-on-Chip (SOC) that utilizes its own Bionic application processor and new 5G modem will take at least 2 to 3 years to perfect. Although the time taken for Apple to release an SoC is an issue, such a move makes sense as integration at the chipset level brings a whole host of benefits, notably further reductions in cost, greater power efficiencies, and better functionality. Apple’s ultimate goal is to engineer a fully integrated system from silicon to software to develop differentiated technology and, therefore, create better products.

Having started using Intel modems on its iPhones to then being reliant on Qualcomm’s for many years, it will be a test to see if Apple’s C1 stands up in terms of performance and reliability when used out in real-world environments. Initial benchmarks suggest that the modem is “good enough” for the budget iPhone, but not for its flagships, as there is no evidence yet to suggest it drastically improves battery life or can keep pace with Qualcomm’s Snapdragon modems. However, by introducing the C1 now, Apple has been able to bring an iPhone down to a “budget” price and gives itself over 2 years to refine and test its 5G modem, and improve integration and performance before its potential break from Qualcomm in 2027. Moreover, despite Qualcomm’s Snapdragon processors having the benefit of vast improvement over decades, they are becoming increasingly expensive, which may have also played a part in Apple’s thinking and has subsequently been a catalyst for Xiaomi again starting to develop its own chipsets with help from MediaTek.

Apple may have chosen to use its first 5G modem in a budget model that is new to its portfolio as a “trial” launch because if it does not perform as well as expected and the overall user experience is compromised, the effect will be marginal for a lower volume device, rather than risking everything by using it in one of its premium products. However, there are already talks that the C1 will appear in a new rumored iPhone 17 Air model, due in September 2025, but is likely to continue with Qualcomm for the remaining flagships. By using both Qualcomm’s modems and its own in future models, it also helps with the continuity of Apple’s strategy to use more than one supplier per component, with the goal of reducing risk and increasing its ability for negotiation.

Apple’s agreement with Qualcomm to supply it with modems is due to end in 2026, and the iPhone 16e signals a major step toward the company’s independence from Qualcomm. First, the reduction in Qualcomm’s supply of modem volume to Apple is expected to drop from a share of between 20% and 80% of launched models in 2025, to just 20% in 2026, and then down to 0% of new models in 2027. Second, it is also intriguing that while there is an obvious swap of modem in the new budget phone, the likes of Qorvo, Broadcom, Skyworks, and Murata still feature in teardown analyses supplying front end modules, while there appears to be no radio content at all in the new iPhone from Qualcomm.

While Qualcomm is clearly being removed from the component supply chain in iPhones, Apple does not appear to be stopping there, as it is said to be ditching Broadcom for its own Wi-Fi and Bluetooth® chips in 2025 in a further drive to self-sufficiency. However, one area that Apple has yet to solve using its own silicon across models is support for 5G New Radio (NR) Millimeter Wave (mmWave), a major requirement to serve its vital U.S. market and something that is absent from the iPhone 16e. Notably, Qualcomm has been at the forefront of mmWave implementation in smartphones and is used currently in Apple iPhones, so it will be intriguing to see how quickly Apple can extract itself from Qualcomm’s solutions (if at all) and add its own to flagship products. However, this will again be no easy task and will add massively to development costs in the short term.