Intel could see $1.5B boost from Apple 'iPhone 7' modem orders

Posted:
in iPhone edited July 2016
Financial research firm Cowen and Company believes Intel will supply Apple with 50 percent or more of the LTE modems needed for "iPhone 7," a win that could generate some $1.5 billion in incremental revenue over the next year for the chipmaker.




In a note to investors on Sunday, obtained by AppleInsider, analyst Timothy Arcuri said recent field checks indicate Intel's share of "iPhone 7" component supply is much higher than expected. Specifically, the firm could provide Apple with about 100 million to 110 million 7360 LTE modems over the next-generation iPhone's lifetime, up from previous estimates of about 25 percent.

The massive parts order could drive $1.5 billion in revenue for Intel, and since development costs have largely been accounted for, $850 million of that sum would be marked as operational profits, Cowen estimates.

"While this is certainly a meaningful number, the psychological effect for [Intel] is even greater as it opens up an entirely new non-CCG narrative," Arcuri said, referring to Intel's Client Computing Group.

For Apple, Arcuri believes the move away from Qualcomm is merely a move to further diversify its supply chain, an overarching product manufacturing strategy that has accelerated in recent years under CEO Tim Cook.

Intel's win is the result of an internal effort to market the 7360 chipset to Apple, which has for years relied on Qualcomm as a single-source modem supplier. Last October, reports claimed Intel had 1,000 people working on a project seeking to better integrate its next-generation LTE modem into 2016's iPhone. Apple also dedicated engineers to the initiative based out of Intel's German facilities, formerly the location of modem maker Infineon, and hired key personnel from the chipmaker's 7360 development team.

Looking ahead, Arcuri believes Intel might leverage the deal to one day integrate its modem technology into Apple's A-series processor. Bringing the baseband chip and supporting components onboard the application processor not only saves space, but promises higher operating efficiency and lower manufacturing costs. The analyst speculates Apple might even opt to use Intel's foundry, pushing Qualcomm completely out of the picture.

Cowen is not the first to report on Intel's supposed 50-percent share of iPhone modem orders, as supply chain rumors in May claimed much the same. Most recently, a report in June said Intel's chipset would land in all "iPhone 7" models produced for AT&T's U.S. cellular network, as well as a handful of international iterations.

Apple is widely expected to launch its next-generation smartphone in September with updated internals and minor design tweaks. A supposed parts leak earlier today highlighted a larger rear-facing camera lens and reconfigured antenna lines on what is thought to be a 4.7-inch model.

Comments

  • Reply 1 of 9
    I believe that Apple has some special exclusive functionality in these modem chips.
  • Reply 2 of 9
    Until Apple makes their own modem. 


  • Reply 3 of 9
    melgrossmelgross Posts: 31,697member
    Eh, I hate to be an "I told you so", but I told you so.
  • Reply 4 of 9
    badmonkbadmonk Posts: 795member
    The problem is that Intel hasn't been a great friend of Apple with their ultrabook program and unwillingness to back the iPhone out of the gate.
  • Reply 5 of 9
    What is a modem? Whatever it is sounds like rumors of 7 dead may be premature.
  • Reply 6 of 9
    nimonimo Posts: 3member
    These analysts are predicting Apple will pay around 15$ per modem to Intel, whereas Qualcomm gets 12$. I am wondering why Apple would pay 20-25%  more to intel, which has literally no other application/customer for their stand alone modems, have been bleeding like hell last 4-5 years, and is probably inferior to the Qualcomm modems.Ideas, anyone ? 
  • Reply 7 of 9
    blastdoorblastdoor Posts: 1,920member
    nimo said:
    These analysts are predicting Apple will pay around 15$ per modem to Intel, whereas Qualcomm gets 12$. I am wondering why Apple would pay 20-25%  more to intel, which has literally no other application/customer for their stand alone modems, have been bleeding like hell last 4-5 years, and is probably inferior to the Qualcomm modems.Ideas, anyone ? 
    If Intel uses their 14nm fab for this, then their modem is quite possibly superior to Qualcomm's in terms of energy efficiency.
  • Reply 8 of 9
    nimonimo Posts: 3member
    blastdoor said:
    If Intel uses their 14nm fab for this, then their modem is quite possibly superior to Qualcomm's in terms of energy efficiency.
    TSMC/Samsung 14-16nm nodes shouln't be any worse than intel 14nm node I guess. 
    On the other hand, intel modems are performance wise (on paper) not as good as the Qualcom one, and doesnt have CDMA. The next year (2017) Qualcom modem is probably light years ahead of the next intel modem. Thinking how desparate intel is for selling their stand alone modems, I am surprised that they got better pricing than Qualcomm's. One anylyst from a big firm last week said intel probably got 5$ per modem, 33% of what is expected in this article.
    Even all works good, I see a modem gate coming up.
    Note: I am apple share holder, so this is not Samsung trolling.. 

  • Reply 9 of 9
    Either way it sucks that Apple is putting their bottom line and the cell carriers like AT&T and T-Mobile before their end-users. We are the one's paying for the product after all. We should be the ones that they are making happy. This sounds like a silent contract sign between Apple and AT&T/T-Mobile to make a GSM-Only phone. SUCK!!!
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