Inside Apple's Failure To Build A Key Part For Its New iPhone

The new iPhone models unveiled last week are missing a proprietary silicon chip that Apple had spent several years and billions of dollars trying to develop in time for the rollout.

- Aaron Tilley

The 2018 marching orders from Apple Chief Executive Tim Cook to design and build a modem chip-a part that connects iPhones to wireless carriers-led to the hiring of thousands of engineers. The goal was to sever Apple's grudging dependence on Qualcomm, a longtime chip supplier that dominates the modem market. The obstacles to finishing the chip were largely of Apple's own making, according to former company engineers and executives familiar with the project.

Apple had planned to have its modem chip ready to use in the new iPhone models. But tests late last year found the chip was too slow and prone to overheating. Its circuit board was so big it would take up half an iPhone, making it unusable.

Investors had counted on Apple saving money with an in-house chip to help compensate for weak demand in the larger smartphone market. Apple-which hasn't publicly acknowledged its modem project, much less its shortcomings is estimated to have paid more than $7.2 billion to Qualcomm last year for the chips.

Engineering teams working on Apple's modem chip have been slowed by technical challenges, poor communication and managers split over the wisdom-of-trying to design the chips rather than buy them, these people said. Teams were siloed in separate groups across the U.S. and abroad without a global leader. Some managers discouraged the airing of bad news about delays or setbacks from engineers, leading to unrealistic goals and blown deadlines.

"Just because Apple builds the best silicon on the planet, it's ridiculous to think that they could also build a modem," said former Apple wireless director Jaydeep Ranade, who left the company in 2018, the year the project began.