TAIPEI -- Intel has started production of modem chips that will go into Apple's upcoming iPhones later this year, while the U.S. semiconductor company continues to eye markets beyond personal computers and pledges to take the lead in fifth generation, or 5G, wireless communication after 2019.

"XMM 7560 [modem chips are] now in the process of being deployed... It is in trial and mass production," said Asha Keddy, Intel's vice president of technology, systems architecture and client group, in an interview on June 7 with the Nikkei Asian Review. "To be honest, we have a late start. But now, I believe we've caught up and later we want to lead in 5G."

Keddy's comments came as most market watchers believe Intel could secure a majority of orders to provide its latest modem chip, the XMM 7560, for the new iPhones, which will debut later this year. But some are cautious that the chipmaker is currently suffering some quality issues. Intel began supplying some modem chips for the iPhone 7 range from 2016 onwards, and continued to gain market share in providing these components to the iPhone 8 range and iPhone X last year. Apple and Qualcomm were caught in a legal battle over licensing fees from the beginning of 2017.

Keddy said the XMM 7560 modem chip was a "milestone" for her company, as it supports code division multiple access, or CDMA, a type of communications technology. The development is aimed at completing the chipmaker's reach to global users, as its previous products could not access some major telecom operators' networks, including Verizon and Sprint.

Intel's Asha Keddy said her company’s modem technology had caught up with the market leaders. (Photo by Cheng Ting-fang)

The chip is also Intel's first product set to reach data download speeds of up to 1 gigabit per second. It is widely viewed as a key achievement in the company's cellular communication technology, where it has long trailed competitors such as Qualcomm, the world's top mobile chip provider. Modem chips are crucial components that determine the quality of calls, data transfer and connection speed.

This year Intel is producing modem chips for Apple in-house for the first time. In 2016 and 2017 the company outsourced production to Taiwan Semiconductor Manufacturing Co., the world's biggest contract chipmaker. However, Intel is still suffering from some unidentified quality issues, so that it might not gain 100% of orders, as previously planned, and would still need to split orders with Qualcomm as in the past two years, according to Bernstein Research.

Keddy declined to comment on Apple's orders, despite the iPhone maker currently being the biggest adopter of Intel's modem technology.

Intel's efforts to boost its own advanced modem technology highlighted the company's ambition to be a leader in the later 5G age, said Keddy. This refers to the next-generation wireless communication standard which allows faster data transfers and lower latency, to enable future connected and driverless cars, complicated artificial intelligence computing, long-distance medical operations, live-streaming, high-quality videos and other developments.

The world's biggest PC and server microprocessor maker was a late entrant into the market for mobile communication chips, such as modems, but has recently been pushing aggressively into the segment to complete its product lineup and grab the next growth opportunities. Intel has already acquired Mobileye, an Israeli autonomous vehicle technology provider, and artificial intelligence chip specialists such as Movidius, Navarna and Altera -- the world's top field programmable gate array (FPGA) chipmaker. These moves are aimed at looking beyond the PC market, and quickly building up future competitiveness. Intel's PC-focused business still accounts for some 50% of revenue.

Intel's next-generation 5G modem offering, dubbed the XMM 8060, will be available next year and will likely be first found in fixed wireless products for telecom operators; connected personal computers made by HP, Dell, Lenovo Group, Asustek Computer and Acer; and in smartphones, said Keddy.

Qualcomm and MediaTek -- the world's second-biggest mobile chip supplier -- both said they will have 5G modems available by 2019.

To expand the business as quickly as possible, Intel also teamed up with Beijing-backed Tsinghua Unigroup's mobile chip unit Unigroup Spreadtrum & RDA, which just renamed itself to UNISOC, to grab more markets and customers, according to Keddy. Unigroup Spreadtrum & RDA (UNISOC) supplies many mid-to-low-end handset makers in China and emerging markets that Intel currently has limited access to.

"5G is one of the biggest bets for Intel and we look it as a system and with a systematic approach. It's really the conversion of computing and communication [technology]," said Keddy. "Phone is only a step [for diversification] ... And we look way beyond only phones."