Apple, Inc. AAPL continues to spend money on a project that may not generate returns commensurate with the investment in the near future, according to Bloomberg’s Mark Gurman said on Sunday.

Long-term focus: Apple is taking a long-term view with its efforts to develop its own cellular modem, a key component of the iPhone, Apple Watch and other devices, Gurman said in the latest edition of the weekly Power On newsletter. Rather than hoping for a big win right from the start, the company hopes its modem will evolve into a “more advanced component” that could ultimately change the way an iPhone looks and works, he said.

Apple sources the modem chips from Qualcomm, Inc. QCOM for more than a decade. It is the most important component of the iPhone after the main processor and its manufacture is difficult, Gurman said.

The Apple specialist believes that it will be difficult to replace Qualcomm’s modem chips because they are already state-of-the-art and “have been thoroughly tested by mobile operators around the world, making them extremely reliable.” Johny Srouji, who leads Apple’s hardware team, said in a CNBC interview that it was unlikely that any upgrades Apple made to that part would result in a better experience for users and that developing a modem was “extremely difficult.”

See also: Everything you need to know about Apple stock

Fallout and patchwork: Apple decided to enter the modem chip manufacturing business in 2018 when it was in a legal dispute with Qualcomm over royalties and patents. A year later, the two parties agreed to settle all litigation between the two companies worldwide.

Apple agreed to make a payment to Qualcomm, and the two companies also signed a six-year licensing agreement effective April 1, 2019, which includes a two-year renewal option, as well as a multi-year chipset supply agreement.

Apple remains: Despite all the opposition, Apple is pushing ahead with its project, Gurman said, adding that the company has “invested billions of dollars, thousands of engineers and millions of man-hours in a project that will not actually improve the company’s devices – at least not initially.”

Some Apple insiders have come to terms with the fact that customers don’t care whether the modem in their phones is made in-house or purchased. Making modems in-house could help bolster the marketing argument that the most important iPhone components are made in-house, but the user experience won’t be noticeably different, Gurman said.

Gurman also noted that Apple’s modem project has suffered numerous setbacks in recent years, including performance and overheating issues, as well as a delay in launch timing by at least next year, he said. The columnist said Apple’s extension of its supplier contract with Qualcomm until March 2027 was due to its plan to gradually introduce its in-house modem chips, starting with niche models.

One of the reasons for switching to an in-house modem was to save money, as Apple had argued that Qualcomm was charging too much for it, Gurman said. Even after the switch, Apple may still have to pay a certain amount to Qualcomm in licensing fees, he added.

In the long term, this could benefit Apple, as the tech giant plans to integrate its modem design into “a new wireless chip that manages Wi-Fi and Bluetooth access,” Gurman said. “That would create a single connectivity component, potentially improving reliability and battery life.” He also sees the possibility of Apple one day integrating all of this into the device’s main system on a chip, or SoC.

This could lead to further cost savings and space savings inside the iPhone, Gurman said, creating more design choices.

“In the best case scenario, everything will go smoothly and most customers won’t even notice the change. But the true value of the project will only be evident years later – when, Apple hopes, it lays the foundation for a better iPhone,” he said.

Apple ended Friday’s session up 0.59% at $226.05, according to Benzinga Pro data.

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