Apple Plans For Dealing With Intel for Supply of iPhone Chips In Addition To Qualcomm

Apple Inc. is going to introduce modems from Intel Corp. in select versions of new iPhone handsets instead of chips from Qualcom Inc. The world’s most valuable public company intends to enjoy diversified supplier base through the planned move.

iPhones using AT&T Inc.’s US network and some other versions of the smart phone developed for overseas markets have been selected for using Intel modem chips. iPhones using Verizon Communication Inc.’s network will continue using Qualcomm accessories as earlier, reports Reuters.

Qualcomm is the lone supplier of communications components for Apple’s flagship products. Basically iPhones to be sold in Chinese market will use Qualcomm chips, reports Bloomberg quoting sources seeking anonymity since the Apple plan hasn’t been shared with public till now. Representatives from all the parties involved have declined to make comment.

After struggling for relevance and incurring operating losses, the supply order from Apple appears as the first major victory for Intel’s chip program. Through bagging the supply order, the world’s largest chip maker again reduces dominance of Qualcomm in the arena of baseband processors.

These processors are used in connecting mobile phones to networks and segregating radio signals into voice and data. Though Qualcomm is going to loss some orders, but still the chip maker has been retaining a major chunk of Apple’s business, according to a report published in Chicago Tribune.

Steve Mollenkopf, the Qualcomm chief executive has forecast for losing one of its largest customers during company’s earnings call in April. However, his nightmare hasn’t turned real fully since the chip maker still holds sufficient business from Apple.      

Soon after the information got public, Intel share prices have been increased by 0.7% to $32.15 which has been witnessed to fall by 7.3% during this year. Meanwhile, Qualcomm shares have been fallen down by 2.9% to $53.40. Prior to that, the share prices have been increased 10% during this year.  

Walt Piecyk, an analyst at BTIG LLC forecasts for 22 and 23 million iPhone sales for AT&T during 2016 and 2017. During the same period, Verizon, comparatively smaller iPhone vendor will sell 21 and 22 million, predicts Piecyk. Apple, the iPhone giant has been able to sale 231 million units globally during the fiscal year 2015.

Modem for iPhone has been provided first by Infineon Technologies AG during the year 2007. Later on, Intel has acquired the wireless division of Infineon. But Intel hasn’t been able to continue the contract since the iPhone giant has picked Qualcomm for its upcoming product versions.

After loosing the contract, chip giant Intel has failed to bag a significant order from any smart phone company. Eventually, market share of Intel has been reduced just to 1%.

In light of capability for data gathering from the network into mobile phone, Stacy Rasgon, analyst at Stanford C. Bernstein considers Qualcomm modem offers better performance than Intel chip. Qualcomm earns $15 from Apple against each iPhone and thus the total revenue has reached at $3.47 billion during the fiscal year 2015.