One of tech world’s great blunders was Intel turning down Steve Jobs’ offer to build the processors for the iPhone. Since then, the smartphone wave has largely bypassed the chip giant, even as Intel has spent billions trying to gain a foothold in the market.
But it appears Intel INTC -0.30% has finally struck gold. According to the new iPhone 7 spec sheet published on Apple’s website this week, the information strongly suggests that Intel will be supplying the LTE baseband modems in some versions of the latest iPhones.
The spec sheet details that Apple AAPL -0.63% is creating two versions of the iPhone 7 and iPhone 7 Plus. Some of those phones won’t support CDMA (or code division multiple access), a cellular technology used on some LTE networks. Apple’s traditional LTE chip provider, Qualcomm QCOM -0.20%, supports CDMA technology, but Intel does not.
CDMA is used most widely in the United States, with Verizon and Sprint relying on the technology for their networks. That means the Intel-equipped iPhones wouldn’t work on these two US networks. Most likely, Intel iPhones would be sold outside of the United States
This would be a big hit for Qualcomm, which has been the sole provider of LTE chips in the iPhone for many years. Exclusive business with the iPhone delivered huge sales volumes for Qualcomm.
But Apple has a good business reason for buying from two different chip vendors. Dual sourcing the LTE modems will give Apple some leverage in negotiations with Qualcomm over prices.
On the other hand, dual sourcing of a critical component like the LTE modem could be a risky move for Apple, which prides itself on a consistent, high-quality experience. Qualcomm has some of the best modem engineering in the world and having multiple vendors could result in unequal performance between different versions of the iPhone 7. (When Apple had both TSMC and Samsung manufacturing its A9 processor for iPhone 6s, it resulted in a difference of 5%-7% in battery life performance.)
It’s likely that Apple has done rigorous testing before going with Intel. ”Apple wouldn’t have adopted a chipset without extensive testing,” said Sundeep Rangan, the director of New York University’s wireless department and an IEEE Fellow
If anyone could knock Qualcomm out of some iPhones, it would be Intel. The company has spent billions on acquisitions and research trying to build modems that are good enough to compete with Qualcomm’s. In 2013, Intel’s mobile unit lost $3.15 billion, and we don’t have any more recent numbers since it stopped breaking out mobile, but it’s likely that number hasn’t gone down.
“Building modems for today’s cellphones is an extremely daunting task,” said Rangan. “It has to support a dizzying array of features and get the chips down to a form factor and low power performance.”
Intel’s new business with Apple hasn’t been officially confirmed. Qualcomm and Intel declined to comment, and Apple hasn’t responded to a request for comment. For confirming these kinds of component details, it’s usually best to have a researcher actually crack open a phone and take a look inside, which is likely to happen after the phones go on sale next week.