Apple’s Modem Chip Breakthrough Signals Need for More, Not Less Antitrust Enforcement
In February, Apple released a new iPhone featuring a new wireless modem chip designed in-house, reducing its dependence on Qualcomm, which has dominated the design and sale of this essential smartphone component. Apple's chip, the C1, was 6 years in the making. The C1 reportedly delivers solid performance and power efficiency, despite lower top-end speeds compared with Qualcomm’s modem.
On the surface, this story is an example of technological innovation and, hence, potentially an argument for easing antitrust enforcement in the wireless chip industry. Yet, Apple’s development of the C1 chip highlights the structural pressure and resources required to challenge an entrenched firm like Qualcomm. Rather than a reason to ease antitrust enforcement, the story makes a clear case for strengthening it. To understand what Apple’s chip means, it’s important to examine how Qualcomm has controlled this industry for more than two decades.
Qualcomm was founded in 1985 and pioneered many advances in wireless communication technology. Its innovations in the 2000s served as a foundation of modern mobile networks. But as Qualcomm’s dominance grew, concerns about its tactics grew as well. Critics pointed to its licensing practice (“no license, no chips”) as the means by which it leveraged control over chip design to extract excessive royalties. Qualcomm created a supply chain chokepoint to coerce its purchasers into accepting its licensing terms, leaving even giant buyers like Apple and Samsung lacking viable alternatives.
In 2013, China initiated the first major antitrust investigation against Qualcomm’s practices. Many other jurisdictions followed, including the EUand South Korea. In 2023, the South Korean Supreme Court upheld a $785 million judgment against Qualcomm for abusive licensing practices.
In the U.S., the first major antitrust suit against Qualcomm was filed in 2017 by the FTC, which argued that the corporation’s unfair licensing terms kept prices artificially high. The lawsuit initially succeeded, with Judge Lucy Koh determining that Qualcomm's practices had “strangled competition in the [modem chip market] for years…harm[ing] rivals, OEMs, and end consumers[.]”
After Qualcomm appealed the decision, the Ninth Circuit Court of Appeals reversed the ruling in August 2020. Relying on antiquated Chicago School analysis, the judges uncritically characterized Qualcomm's tactics as legally “hypercompetitive.” Qualcomm was allowed to continue business as usual. (Read Open Markets Institute’s 2019 amicus brief in support of Judge Koh’s decision.)
Qualcomm’s successful appeal left all its customers at the mercy of the corporation’s licensing terms. Apple, however, thanks to its vast wealth and power, was able to do something about it – pouring billions into developing an in-house solution, boosted by the acquisition of Intel’s smartphone modem business in 2019.
Critics could argue that Apple's modem project proves that competition is flourishing in this market. The problem, however, is that Apple is practically alone in having the scale and financial might to spend years developing an expensive, high-risk product. And even Apple wasn’t sure of the outcome, hedging its bets in a way only such a large corporation can by paying Qualcomm a secret amount, likely in the billions, in 2020 to guarantee a supply of modem chips for up to eight years while developing its own. And even with all its advantages, Apple’s chip falls short of matching Qualcomm's capabilities.
Under the antitrust laws, businesses are generally encouraged to expand their operations and product portfolios by developing new capabilities. But the key lesson here is that if a corporation as dominant as Apple was barely able to break free from Qualcomm, what hope does any other business have? Moreover, Apple's move also reinforces the power of another tech giant: Taiwan Semiconductor Manufacturing Company (TSMC). Like Qualcomm, Apple now relies on TSMC to manufacture its modem chips, which further entrenches production in this one dominant firm.
It would also be wrong to conclude that Apple is fully committed to such innovation. On the contrary, as Vision Pro and Siri attest, the corporation does not always succeed when it attempts to develop new products. Indeed, Apple today spends twice as much on stock buybacks and dividends as on R&D.
That’s why enforcers around the world should turn their attention back to Qualcomm's chokehold on this sector, such as by pursuing a breakup of the corporation. Another option would be to revive a once-powerful antitrust policy under which the government forced dominant corporations to license essential technologies, either for free or for a small fee. Enforcers should also focus their attention on TSMC.
If enforcers seek immediate inspiration or guidance, they might turn to the DOJ’s current lawsuit against Apple, which aims to break its restrictive technical rules to block competition and keep consumers and developers locked into its services.
The question isn’t whether a corporation like Apple can afford to build a modem or whether it succeeds or fails in doing so. It’s whether markets are constructed to deliver the best outcomes for society, in the form of lower costs, better quality, resilient supply chains, diverse suppliers, open competition, and real innovation. Concentrated control threatens all of that.
This article appeared in The Corner Newsletter: June 06, 2025.
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