Team Building: Apple Plans to Develop Chips In-House

One of the latest and perhaps most game-changing pieces of news to come from Apple this week are the company’s plans regarding baseband chips. Apple plans to develops chips in-house and is reportedly hard at work to assemble a research and development team to this end. These chips are essential to all of Apple’s smartphone devices, since they manage radio functions such as modulation, signal generation and several others. Don’t confuse the baseband chip with the iPhone’s A7 processor, which is a different component altogether and has already been produced and designed in-house by Apple for quite some time now. So, what do these prospects for the future mean for the next generations of iPhones?

apple-plans-to-develop-baseband-chipsHow the Apple plans to develop chips in-house might improve iPhones

At the moment, Apple is buying baseband chips from Qualcomm. These chips are being produced by an Apple manufacturing partner – the Taiwan-based Seminconductor Manufacturing Company. The Apple plans to develop chips in-house for upcoming generations of iPhones (specifically, those that will hit the markets in 2015) will see the company placing orders for baseband chips with Samsung Electronics and Globalfoundries. The rumors, which have yet to be confirmed by Apple, stemmed from anonymous industry sources.

This, of course, is not Apple’s first move in recent times toward moving chip development and production in-house. A while ago, the company acquired Renesas Electronics, a company that creates chips for smartphone displays. Another purchase made by Apple targeted Passif Semiconductor – which are in the business of providing low-power wireless chips. Many surmised at the time that this latter move has a lot to do with the upcoming iWatch (allegedly to be released in late 2014 or early 2015). Low-power wireless chips have been used in wearables and there is proof that they improve the devices’ battery life.

In case you’re wondering why Apple is pulling all these moves, it’s because they’re making a visible effort to control their production supplies, as well as to impose better management over the core technologies they use. Aside from acquisitions and investments into in-house research and development, Apple has also struck several business partnerships to the same end. One of them, for instance, was signed with GT Advanced, a supplier of sapphire displays, which the company based in Cupertino, California, obviously uses for the production of the iPhone.

Are R&D Investments a good idea for Apple?

The above-mentioned business strategy has gotten many industry experts, as well as regular Internet commenters wondering if it’s a good idea after all, for Apple to be investing in such specific technologies and components. On the one hand, many have acknowledged that Apple needs to exert better control over the hardware their devices entail, for the sake of both quality and cost efficiency. At the same time, it’s the unique combination of investing both into quality hardware, as well as into well-developed software that has made Apple stand apart on the market. However, could Apple have bitten more than it can chew, financially, with all their newfound focus on in-house research and development?

Though there is no consensus to speak of just yet, in this issue, many agree that Apple does need more control, in order to do better for itself on the market. Essentially, researching and developing new components in-house is perhaps the only way it can continue to offer unique products to the smartphone market. Competition is fierce and, while the move on the part of Tim Cook’s company might be risky, it must also be acknowledged that Apple is an industry giant. Without risk, there is little hope (and room) for it to continue growing. Will the move prove financially sound, or will it spell trouble? That time alone will tell.