The Strange Thing About Apple’s Recent Hires

Source: Thinkstock

Source: Thinkstock

According to AppleInsider, over the past three years, Apple (NASDAQ:AAPL) has hired at least thirty “mid- to senior-level baseband software and hardware engineers from existing players like Broadcom and Qualcomm.” The reason for these hires, as the common speculation goes, is because the company is trying to bring as much hardware development in-house as possible.

Controlling more of their hardware would would benefit Apple in a number of ways. It would let the company combine various chips into one for better power efficiency. It would reduce its reliance on other hardware companies, and as a byproduct, it would minimize potential leaks that let out information about upcoming products. In short, Apple would have more control over their products from inception to release.

What’s interesting about Apple hiring baseband engineers in particular, according to analyst Brian Modoff of Deutsche Bank, is that baseband chipsets are particularly challenging for a company to begin making on its own. As quoted by Street Insider, Modoff said, “There has been recent speculation in the press about Apple developing their own baseband chipset. We dismissed this early, and felt most others would as well given the herculean task of building a multimode baseband from scratch. As most who follow the wireless industry understand, building a multi-mode baseband is not about R&D dollars.”

The baseband chip is a core component of a mobile phone that acts as the “brain” of the device’s wireless modem. It controls the functions that connect the phone to the cell network, Wi-Fi, and Bluetooth — basically, anything that requires an antenna. It’s a key component to any cell phone.

In addition to the thirty baseband engineers already hired, AppleInsider says Apple is advertising fifty more job openings related to RF chip design. However, even with eighty engineers on staff, that still wouldn’t be enough to begin making baseband chips in-house, according to Modoff.

“Sure dollars will help, but it also takes time, at least five years by our count, top-notch talent leading the effort and about 1000 engineers in total — well short of the 30 positions Apple currently has posted,” Modoff said. “Instead of an organic baseband development, we believe Apple is rather trying to realize better integration with existing baseband chipsets and their apps processor, or possibly developing their own internal Wi-Fi chipset. We reiterate our Buy on Qualcomm, as we do not feel that this recent press report affects Qualcomm’s long term prospects.”

These comments are is similar to a statement made last week by JP Morgan’s Rod Hall, as reported by AppleInsider. Hall said development of baseband chips is “notoriously difficult,” and speculated that Apple wouldn’t be able to incorporate baseband chips of their own into iPhones until at least next year.

There’s a difference of opinion between Modoff and Hall regarding how long it might take Apple to begin producing baseband chips — Modoff says five years, while Hall says one. But both agree that it won’t happen this year, if it ends up happening at all. To support his argument, Hall points to Broadcom, a company that has tried recently to produce an LTE modem and has encountered a number of roadblocks, many of which would also affect Apple if it does go into baseband chip production.

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