mpantone

scoodog said:

What this article fails to explain is this:  What's the big deal if Apple creates its own 5G chip vs. uses a chip developed by another company?

No one knows until we see Apple's chip.

That said, there are some likely benefits: cost savings, fewer royalty payments (cellular technologies are heavily patented), more control, more flexibility with feature choice (which might include jettisoning unneeded technologies), better performance-per-watt (less power), easier integration into Apple's designs, et cetera.

Most likely it would be a combination of several of these plus others I haven't listed.

Remember that Apple is highly motivated to design their own chips, they have done so for the iPhone, iPad, Apple Watch, AirPods, etc. creating custom ASICs for their own use. They do not sell this technology to others. This isn't restricted to SoCs, they have designed ASICs for more specialized purposes. They stopped use off-the-shelf Arm cores and now design their own (they use the Arm instruction set but no longer rely on reference designs). They have included some of their custom silicon alongside Intel CPUs, the T2 Security Chip is one such IC.

Every time Johny Srouji appears in an Apple keynote event, he repeatedly pounds home the "performance per watt" mantra. He has been doing this for years. Personally I believe this is one of the major drivers for Apple's 5G modem development program. No surprise here. There have been benchmarks from the very first iPhone that shows that web surfing over cellular data uses more battery than wifi.

Above all, Apple likes as much as control as possible where it makes the most sense. That's a major reason why Apple dumped Intel CPUs in the Mac product line. They are no longer at the mercy of Intel's product map (and its frequent delays).

Whatever they are working on, it's not a photocopy of an existing Qualcomm product, that's for sure. That's not Apple's style. If they can't offer significant feature differentiation, they really aren't that interested. That's why Apple has abandoned some markets (e.g., AirPort routers, standalone MP3 players) even ones that they formerly dominated.

wood1208 said:

No one except Apple knows when Apple will introduce it's own home grown 5G in products.  

avon b7 is correct.

And by extension, some chip foundry will know since Apple does not manufacture their own ASICs. When/if Apple kicks Qualcomm to the curb, some foundry is going to get a purchase order for tens of millions of 5G modem chips. Most likely that foundry will have been working together with Apple for years, providing assistance with tape-outs, engineering samples, etc.

Apple: "Here's our purchase order."
Qualcomm: "Hmmm, I see you only ordered small quantities of the previous generation modem chips. Would you like any of the new modem chips? They're really great."
Apple: "No, not today."
Qualcomm: "Oh, I see. Okay. Um, thank you for your purchase order."

Apple doesn't just wake up one morning and say, "Let's make a 5G modem chip today." They have been working on this for years probably before they acquired the cellular modem business cast off by Intel. Apple's prototype chips have been side by side with their supplier chips in their labs.

In the same way, Apple probably started working on Apple Silicon M-series chips in earnest since the A8 SoC's debut (first 64-bit SoC widely deployed in a consumer mobile device).

If Apple does go with their own in-house 5G modem with the iPhone 17 lineup (fall 2025), Qualcomm would probably know in spring 2025. Or Apple could choose to debut with another product like an iPad Pro earlier in the year. Either way, Qualcomm will know when an anticipated purchase order fails to appear.

mayfly said:

eightzero said:

vtvita said:

eightzero said:

mayfly said:

eightzero said:

OK, I really don't get this. How does GS lose money on a credit card? Are they paying Apple a disproportionate amount of their rake from the cardholders? The article says "credit losses" so somehow more Apple Card holders are welching? 

Or...it is possible GS thinks they just aren't making the billion they planned? Not sure that's a "loss."

Nope. They're losing plenty. Their customer acquisition cost is $350 per account. In addition, the Apple Card attracts a much more affluent demographic who pay their balances every month, depriving GS of interest charges. On top of that, there is the "buy now, pay later" program that allows customers to pay over 4 months without interest charges. That's how they're losing money. I wouldn't cry for GS, though. They made $10.9 billion in the second QUARTER of this year, even with the Apple Card losses.

OK, so I understand: GS pays Apple $350 for each new account, and since those new accounts generally don't pay GS interest (affluent customers) GS can't make back the $350? And who gets the swipe fee from merchants (that I am always asked to reimburse the merchant for)? Is there no swipe fee charged to a merchant on the Apple Card? GS doesn't get a cut of each transaction?

I am sure GS has overhead on these operations. They have to pay staff to provide customer service; and other infrastructure like IT and the like. But a billion in losses to that? Really?

eightzero, you "understand" nothing. mayfly did not say "GS pays Apple $350 for each new account." Go back and start over.
BTW, this card from GS is the most miserable credit card experience I've ever had, for many reasons, which I've written about before. I've simply made it dormant, seldom—if ever—to be used again.

It is clear I understand nothing, hence the question mark at the end of the sentence. Go back and read again. I am very confused about what is being reported and how it happened. I'm not clear on that $350. Is it some sort of overhead estimate? Licensing to Apple? In any case, it seems like someone majorly blew this. A GS shareholder should be outraged...and this is clearly not of Apple's doing.

So a $350 per customer acquision cost could described this way: GS spends $3.5 million dollars advertising the Apple Card. One out of every 10,000 people get the card, making the per customer acquision $350.

It's not just advertising.

GS has their own processes in approving applicants. Credit reports aren't free. And credit reports don't reflect other financial aspects of an applicant's life. Time at current employer, salary, time at current residence, court records, whatever. GS isn't just pulling a VantageScore from a database and rubber stamping the application.

Even the physical card mailout costs money. A new customer acquisition is more than some ads on social media.

vtvita said:

eightzero said:

mayfly said:

eightzero said:

OK, I really don't get this. How does GS lose money on a credit card? Are they paying Apple a disproportionate amount of their rake from the cardholders? The article says "credit losses" so somehow more Apple Card holders are welching? 

Or...it is possible GS thinks they just aren't making the billion they planned? Not sure that's a "loss."

Nope. They're losing plenty. Their customer acquisition cost is $350 per account. In addition, the Apple Card attracts a much more affluent demographic who pay their balances every month, depriving GS of interest charges. On top of that, there is the "buy now, pay later" program that allows customers to pay over 4 months without interest charges. That's how they're losing money. I wouldn't cry for GS, though. They made $10.9 billion in the second QUARTER of this year, even with the Apple Card losses.

OK, so I understand: GS pays Apple $350 for each new account, and since those new accounts generally don't pay GS interest (affluent customers) GS can't make back the $350? And who gets the swipe fee from merchants (that I am always asked to reimburse the merchant for)? Is there no swipe fee charged to a merchant on the Apple Card? GS doesn't get a cut of each transaction?

I am sure GS has overhead on these operations. They have to pay staff to provide customer service; and other infrastructure like IT and the like. But a billion in losses to that? Really?

eightzero, you "understand" nothing. mayfly did not say "GS pays Apple $350 for each new account." Go back and start over.
BTW, this card from GS is the most miserable credit card experience I've ever had, for many reasons, which I've written about before. I've simply made it dormant, seldom—if ever—to be used again.

This was my experience as well. Goldman Sachs sucks rocks at running a consumer credit operation. I applied for the Apple Card when it was released (August 2019), used it twice for two very small purchases and ended up dealing with Goldman Sachs for an hour because of a bill payment snafu. Since then I have never used the card. That's right, nearly four years of being a cardholder without a single transaction.

And Goldman Sachs can't just kick me to the curb. I have something like $0.12 in Apple Cash credit (I do not have a linked bank account). Due to US consumer banking laws, that's MY property. They're not "miles" or "points". If GS wanted to close me out, they are legally obligated to mail me a check for $0.12. Hell, closing an account probably costs them $20-30 in administrative fees, salaries, etc. 

Goldman Sachs can suck it.

If Goldman Sachs gets out of the consumer lending business, they will sell off my account to some other financial institution or more likely close me out, mail out a check and write me down as a loss, taking a direct hit off their bottom line. They can't sweep those twelve cents under the rug. And yes, if they filed for bankruptcy, they would still be obligated to contact me about it and include me in all of their administrative procedures as a creditor.

My assumption is that Apple has prototypes of gigantic TVs/monitors/displays in their labs. Every single commercially viable unit has probably been on Apple engineering campuses for the past 10-15 years as well as a bunch of engineering samples that never made it to market.

There is probably a 40" iMac sitting in a lab in Cupertino right now.

It must be pointed out yet again that Apple prototypes thousands of designs and only a handful see the light of day as a shipping SKU.

Just because they can build something doesn't mean it must be sold as an actual product. For every planned product release, a given unit probably needs to pass 10-12 justifications. It won't be one factor that dooms a particular prototype.

We do know that Apple's shareholders have long-standing expectations of high gross margins though. Apple is a publicly traded corporation and thus its primary responsibility is to increase shareholder value. Apple does not exist to sell loss leaders.