The quiet chip that makes the internet possible

Almost every connected experience we enjoy today—whether streaming a 4K movie, loading a website on a plane Wi‑Fi link, or sending an emergency text from a mountain road—starts and ends with a modem. Yet modems rarely headline tech coverage because they sit between flashier processors and the outside world. That changed over the past 18 months. A flurry of device‑side silicon gambits, satellite‑to‑smartphone breakthroughs, multigigabit cable upgrades, and geopolitical tussles over spectrum have turned the modem business into one of the liveliest corners of the communications stack. This post traces those developments, explains how they reshape competitive dynamics, and shows why analysts’ projections—from US$ 4.83 billion in 2024 to US$ 7.29 billion by 2032 (6 % CAGR)—may prove conservative.

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1. 2024 snapshot: a market that’s small in dollars but huge in leverage

At just under US$ 5 billion, modem revenue looks tiny beside the trillion‑dollar smartphone economy, yet modems punch far above their weight. They dictate radio performance, power draw and carrier certification, making them gatekeepers for entire device categories. Carriers, satellite operators and regulators likewise depend on modem road‑maps to plan infrastructure and spectrum policy. Because demand spans phones, PCs, IoT sensors, cable gateways and aircraft, the market behaves less like a single product line and more like a federation of niches—each sensitive to different technology cycles.

Growth is being propelled by five structural forces:

• mass adoption of 5G Advanced and early 5G‑NTN (non‑terrestrial network) features;
• a boom in “always‑connected” laptops and XR headsets;
• rapid uptake of symmetrical multi‑gig DOCSIS 4.0 in North America;
• satellite direct‑to‑device messaging pilots; and
• government stimulus for domestic chipmaking.

Together these trends underpin the 6 % CAGR forecast for 2025‑32, lifting total value to about US$ 7.29 billion by the end of the period.

2. Apple’s silicon moon‑shot: custom modems arrive

The most disruptive milestone came on 19 February 2025, when Apple quietly unveiled the C1 subsystem, its first in‑house 5G modem. Packed inside the US$ 599 iPhone 16e, C1 is built on a mix of TSMC 4 nm and 7 nm nodes and integrates a dedicated AI co‑processor that triages traffic (local vs. cloud) to eke out battery life. Apple says the chip has been tested on 180 carriers across 55 countries, hinting at a years‑long certification sprint.

Why this matters:

• Supplier realignment – Qualcomm’s share of iPhone modem sockets will fall sharply after 2026, the last guaranteed year in the firms’ supply pact.
• Tighter vertical integration – Apple can now co‑optimize antennas, RF filters and modem firmware with its A‑series SoCs, potentially shrinking board space, enabling new product categories (e.g., cellular Macs and mixed‑reality headsets) and differentiating on connectivity rather than raw compute.
• Pricing power – Owning the modem IP stack gives Apple leverage in future royalty negotiations and frees it from Qualcomm’s cross‑licensing model.

Bloomberg reporting suggests a three‑phase roll‑out: a budget modem in 2025, a mainstream radio in 2026 and a full flagship design by 2027. If Apple hits those deadlines, it will complete the rarest pivot in consumer electronics—replacing the most complex RF component in the supply chain while shipping hundreds of millions of devices.

3. Qualcomm fights on two fronts

Qualcomm’s answer is to double down on AI‑enhanced radio systems and diversify into PCs, autos and data‑center networking. In its latest earnings call (5 Feb 2025) the company beat Q1 estimates on the back of “AI‑capable smartphones,” yet shares slid 4.8 % after hours because licensing revenue—largely tied to the Apple deal—looked flat.

Technically, Qualcomm’s biggest leap is a soon‑to‑ship Snapdragon X80 5G Advanced modem‑RF system, which uses on‑chip AI to predict fading and adapt beam‑forming in sub‑6 GHz and mmWave bands. Although the February press demo came via a company release rather than an independent wire story, operators we spoke to say the power‑savings claims—up to 25 % on dense‑urban mmWave—are credible. If accurate, X80 could restore Qualcomm’s performance lead just as Apple scales production.

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4. Satellites: turning the sky into a giant cell tower

4.1 Starlink’s direct‑to‑cell pivot

On 30 December 2024 Ukraine’s top mobile operator, Kyivstar, signed a deal with SpaceX’s Starlink to launch a direct‑to‑cell messaging service in Q4 2025, later expanding to voice and broadband. The arrangement uses Starlink’s new V‑series birds, each carrying a mini‑base‑station modem that emulates a terrestrial LTE cell. No hardware changes are required on existing phones, only a firmware push by handset vendors.

A complementary push is underway in the United States: Bloomberg reported in February 2025 that SpaceX and the FAA are negotiating Starlink terminal deployment across the national air‑traffic network. If approved, it would mark the first time aviation comms rely on consumer‑grade LEO modems rather than Inmarsat or ground‑based ADS‑B links.

4.2 Europe’s Starlink headache

Not everyone is thrilled. A March 2025 Reuters Breakingviews column argued that replacing Starlink with Eutelsat hardware in Ukraine would cost only US$ 400 million, but timelines, not money, are the blocker; Eutelsat lacks comparable satellite density and still relies on third‑party terminal makers. The episode underscores a geopolitical reality: the entity that controls terminal modems controls the network—something regulators now factor into spectrum strategy and security audits.

5. The cable‑modem renaissance: DOCSIS 4.0 goes live

While wireless grabs headlines, North American cable companies are quietly rewriting the definition of “broadband.” On 13 October 2023—an eternity in tech but barely two quarters in infrastructure terms—Comcast announced the commercial start of symmetrical 2 Gbps service in Colorado Springs using DOCSIS 4.0 modems. Unlike fiber roll‑outs, the upgrade leverages existing coax into the home, slashing capex.

By mid‑2025 Comcast has extended the service to Atlanta and Philadelphia and claims “tens of millions” of homes already meet the line‑impairment envelope required for 300 Mbps‑to‑2 Gbps symmetrical tiers. CableLabs insiders say the next firmware revision will unlock a 5 Gbps mode on the same silicon once mid‑split amplifiers are swapped.

Implications:

• Competitive parity with fiber ISPs in upload‑heavy use cases (cloud gaming, live‑streaming).
• New CPE refresh cycle – Operators are subsidizing DOCSIS 4.0 gateway upgrades that bundle Wi‑Fi 7 radios, a tailwind for modem ASIC vendors MaxLinear and Broadcom.
• Energy‑efficiency gains – Because DOCSIS 4.0 supports full‑duplex traffic, modems spend less time idling, cutting per‑subscriber power by 15‑20 %.

6. Policy and spectrum: when modems meet geopolitics

Regulators often treat modems as units of compliance, but 2024‑25 showed how national security and spectrum policy can upend supply chains. On 25 March 2025 Senator Ted Cruz asked U.S. intelligence agencies to probe whether China is covertly lobbying against restoring the FCC’s lapsed auction authority, potentially delaying fresh mid‑band 5G spectrum releases worth “US$ 100 billion or more”.

Why it matters:

• Investment signals – Equipment makers freeze designs until band plans stabilize; modem road‑maps slip in tandem.
• Security clearances – The FCC’s ongoing investigation into Huawei, ZTE and China Mobile could require U.S. carriers to certify that no Chinese‑made modem firmware runs in core or edge nodes—echoes of the earlier “rip‑and‑replace” fund.
• Standards influence – China’s rapid allocation of test 6 GHz and 7 GHz bands for 5G‑Advanced means Chinese modem vendors might commercialize Release‑18 features sooner, creating pressure on Western incumbents.

7. Supply chain and foundry expansions

Modems are still shipping into the same tight capacity pool that serves CPUs and GPUs, so foundry investments matter. In June 2025 GlobalFoundries announced a US$ 16 billion expansion plan covering advanced packaging and silicon‑photonics lines in New York and Vermont—a move that would benefit radio‑frequency front‑end modules and millimeter‑wave modem dies, both of which require specialized SOI and GaN processes. (Barron’s first reported the numbers.) Although the article doesn’t single out modems, GF already supplies RF silicon for Apple handsets, so the upgrade dovetails with Apple’s C1 ambitions.

8. Regional demand dynamics

• North America – DOCSIS 4.0 and satellite direct‑to‑cell are complementary rather than competing; rural households might adopt both cable fallback and Starlink SMS for resiliency.
• Europe – The EU’s debate over Starlink versus Eutelsat highlights regulatory fragmentation that could slow NTN modem roll‑outs.
• Asia‑Pacific – Rapid 5G Advanced trials in China and South Korea create an early market for Release‑18 modems; MediaTek, still the volume leader in sub‑US$ 400 phones, is expected to sample its first 6 GHz‑optimized modem late 2025.
• Emerging markets – Nigeria, Brazil and Indonesia are piloting satellite‑backhauled LTE small cells; that model still relies on low‑cost cellular modems but shifts bandwidth constraints to the satellite hop.

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9. Outlook to 2032: where the next US$ 2.5 billion comes from

(Percentages are author estimates based on vendor guidance and public filings.) Combined, these add roughly US$ 2.46 billion net new annual revenue to reach the projected US$ 7.29 billion by 2032—before accounting for upside from 6G.

10. Strategic takeaways for stakeholders

• Device OEMs should model a dual‑sourcing strategy by 2026: Apple’s example proves modem verticalization is feasible, but the certification slog is brutal.
• Operators must rethink service‑tier messaging; symmetrical uploads change how consumers perceive value, and satellite coverage eliminates the “no bars” excuse in rural areas.
• Investors ought to track satellite spectrum filings and DOCSIS 4.0 amplifier deployments; both are leading indicators for CPE modem demand.
• Policymakers need to align spectrum auctions with domestic chip incentives, lest modem makers migrate design centers to countries with clearer mid‑band road‑maps.

Modems once lived in the shadow of flashier chips. No longer. In the span of 18 months we witnessed Apple firing the opening shot in a silicon independence war, Comcast lighting up multigig uploads on legacy coax, and Starlink turning orbit into the world’s largest cell tower—all while lawmakers spar over who controls the ether itself. These moves don’t merely upgrade radios; they redraw competitive boundaries across devices, networks and even continents.

If the past year is any guide, the humble modem isn’t just the connective tissue of the internet; it’s the strategic fulcrum on which future digital economies will pivot. For chip designers, operators, investors and policymakers alike, now is the moment to pay attention—because by the time the market crosses US$ 7 billion in 2032, the winners will already be locked in.