Munich, San Francisco First pleasure, then work: Apple boss Tim Cook spent Tuesday evening at the Oktoberfest. The next morning, the manager was still in top shape – and had good news for his more than 2000 engineers in Munich. The head of the group explained to reporters that staff will continue to be recruited in the Bavarian metropolis. “Munich makes a significant contribution to the company.”
A few hundred meters away from the main train station, the US technology group is in the process of building a new center for chip development. There is still a fence around the area where a car dealership used to stand. In the next few weeks, the first employees, who have so far been spread across the city, are to move in. “We couldn’t be happier here,” Cook said.
The semiconductor specialists in Munich play a central role in Cook’s big plan: “We want to master all the core technologies that we need for our products ourselves,” emphasized the 61-year-old. This is the key to standing out from the competition.
Ironically, Apple has not yet achieved this goal with the future technology 5G, the new mobile communications standard. The US group is dependent on Qualcomm, the world’s leading supplier of cell phone chips.
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Even in the top devices iPhone 14 Pro and iPhone 14 Max, which were only introduced in September, Apple uses the Qualcomm Snapdragon X65 modem.
Apple invests one billion in Munich
That should change in the future. The teams in Munich put a lot of effort into working on new semiconductor solutions. Apple technology chief Johny Srouji did not want to comment on specific projects on Wednesday in Munich. However, group circles say that the location is extremely important for developing your own 5G modems.
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Last year, Apple announced that it would invest one billion euros in chip development in Munich over a period of three years. The Bavarian capital is the iPhone group’s largest development center in Europe, Cook said on Wednesday. However, that’s a small amount compared to the roughly $22 billion that Apple spent on R&D in 2021 alone.
Despite the praise from the Apple boss, it is unclear how far the specialists in Munich are with the development of the 5G modem. Analyst Ming-Chi Kuo from TF International Securities recently reported delays. “My latest survey suggests that Apple’s own iPhone 5G modem chip development may have failed, leaving Qualcomm as the exclusive supplier of 5G chips for the new iPhones in the second half of 2023.”
The US giant had previously assumed that it would reduce its dependency on Qualcomm modems to 20 percent this year. Now Apple will probably stay 100 percent with the Californian chip provider.
Own modems and processors could give Apple a decisive competitive advantage.
(Photo: Apple)
The in-house development of 5G modems has several advantages for Apple. Probably the biggest: Apple could fall back on customized chips and differentiate itself in this way. In addition, Apple would make itself less dependent on suppliers like Qualcomm. Apple and Qualcomm have fought over patents in court for years.
Second, Apple could make devices like the iPhone more compact. Processor and modem are still mostly separate from Apple. By developing the modems itself, the company could combine both technologies to make smartphones smaller and more powerful.
Third, Apple could save money. According to calculations by the market researcher Gartner, the company spent around 68 billion dollars on the purchase of chips in 2021 alone. This makes the group by far the largest customer in the semiconductor industry worldwide.
“Apple’s first processor sent a shockwave through the industry”
However, the employees in Munich are not only concerned with mobile communications. Another important focus is the power supply of chips, the so-called power management. According to Cook, the location made a significant contribution to the development of processors for Mac laptops.
Apple brought its first M1 computer processor onto the market two years ago, thus parting ways with long-standing in-house supplier Intel. Cook presented the further developed M2 this summer.
Processors are the brain of every computer. It is by no means a matter of course that Apple has succeeded in developing its own powerful processors. “The birth of Apple’s first processor for personal computing sent a shockwave through the industry,” according to market researchers at Yole. No other computer manufacturer has managed to do this so far.
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Almost all PCs and notebooks, including those from Apple, have so far been equipped with processors from Intel and AMD. They use the X86 architecture. Only very light notebooks and the so-called Chromebooks ran with processors based on the chip design of the British technology company Arm. The arm architecture was essentially reserved for smartphones.
Apple changed that. “Apple’s M1 showed that this architecture can compete in both power consumption and performance,” Yole analysts said.
Munich: As attractive as Silicon Valley
The group from Cupertino has been represented in Munich for more than 40 years, but has only really got going in recent years. In 2015, Apple acquired the Munich-based digital company Metaio, a recognized specialist in virtual reality. In 2019, Intel added the smartphone modem business, which had belonged to the Munich chip manufacturer Infineon until 2010. And finally, three years ago, the Americans also acquired parts of the German-British supplier Dialog Semiconductor, which is based outside the city gates.
Cook even compared Munich to Silicon Valley on Wednesday: Just like the famous stretch of land in California, the Bavarian metropolis is also a place “where people would like to live”. This is a good argument, especially when it comes to recruiting foreign skilled workers.
More: Europe’s most valuable chip start-up takes on industry giant Nvidia with the help of TSMC.