Edison Investment Research

Qualcomm vs. Intel – Storm in a teacup.

Qualcomm thrashes Intel but not where it really matters.

 It appears that Qualcomm has once again demonstrated superiority over its peers when it comes to radio but we think it highly unlikely that users will notice.
 Radio performance analysis specialists Cellular Insights have run a series of tests on the iPhone 7 powered by Qualcomm’s MDM9645M modem and the iPhone 7 powered by Intel’s XMM7360 modem to compare radio performance.
 The results are startling and much more so than in the infamous “chipgate” episode where the A9 (iPhone 6s) made by TSMC resulted in 5-7% battery life than the same chip made by Samsung.
 In this case the Qualcomm modem has consistently outperformed the Intel modem on 4G by 30% when the signal was moderate and 75% when the signal was at its weakest.
 When the signal was at full strength, both modems performed similarly.
 This does not come as a huge surprise as Qualcomm modems have for years been consistently better at performing in non-ideal radio environments giving it a major point of differentiation.
 This difference is far greater than it was for chipgate but we doubt whether this is going to have users scrambling to check the model numbers of their devices prior to purchase.
 First: Battery life is a major issue for every smartphone and is a concept that is very easily grasped by the consumer.
 As long as there is a connection and the service works, most users will be satisfied, meaning that a difference in speed is less likely to be noticed.
 A device that does not turn on or fails right at a critical moment is far more noticeable.
 Second: Bleeding edge.
 What Cellular Insights has measured is performance at the bleeding edge.
 For example, in band 4 at -120dBm (very weak radio) Qualcomm manages around 30Mbps while Intel does around 12Mbps.
 When we look at the Digital Life pie of smartphone usage there is not a single service that we think will be noticeably degraded by that difference to the point where the user will blame the radio.
 Furthermore, almost all networks still have an underlay of 3G meaning that user will have some data coverage even in the advent that 4G fails completely.
 Most tellingly of all is the fact that the iPhone 7 has been widely available for over a month and there has been not a single murmur from reviewers or users that one version of the device has a better radio than the other.
 Consequently, we think that posterity will take note of this difference and move on with no real impact being felt in shipments of one variant or the other.
 However, for Qualcomm this is an important demonstration that it remains peerless when it comes to radio modems.
 This is critically important as this test is likely to influence device makers when they are selecting which modems to use in their products giving Qualcomm slightly better pricing power.
 The general consensus out there is that radio modems are beginning to commoditise as LTE matures as a standard but this test clearly shows that this is not the case.
 Despite this good news, Qualcomm still needs to expand its horizons into other device categories to keep growth going as smartphones are grinding to halt.
 This is where its smart drone, IP camera reference platform and potential purchase of NXP semiconductors come into play.
 This is bad news for Intel but we think it can quite easily shake it off as its performance inside the iPhone 7 is clearly good enough.

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