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This Chip Will Be in the Next iPhone and iPad

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Way back in early 2011, when Apple (Nasdaq: AAPL  ) brought the iPhone 4 to Verizon (NYSE: VZ  ) , Cupertino tipped its hand. With a company as notoriously secretive as Apple, little tidbits of what's on its mind are few and far between, and you had to be watching pretty closely to catch this one.

A trip down memory lane
The original AT&T iPhone 4 carried a baseband modem that allowed it to connect to 3G networks made by Infineon, which has since been acquired by Intel (Nasdaq: INTC  ) . Infineon's baseband is compatible only with GSM/UMTS-based 3G networks like AT&T's or T-Mobile's, while Verizon and Sprint Nextel run CDMA/EV-DO networks that require a different chip.

When the Verizon version of the iPhone 4 reached eager hands waiting to tear the thing asunder, despite the fact that the outer body looked nearly identical, one of the most important changes to its guts was that Apple had switched baseband suppliers to Qualcomm (Nasdaq: QCOM  ) , specifically to a chip in its Gobi lineup.

The Verizon iPhone 4 carried the Qualcomm MDM6600, a world-mode baseband chip that supports both GSM/UMTS and CDMA/EV-DO networks, although it was designed without the necessary SIM card slot, effectively rendering the GSM compatibility useless and limiting it to CDMA usage only.

Both models remained available for each respective carrier, with each sporting different baseband chips inside.

The same old story
Fast-forward a few months to the release of the iPad 2, which is similarly available with 3G connectivity for Ma Bell's and Big Red's networks. Both models were released into the wild at the same time, unlike the iPhone 4. You might think that Apple would have taken that opportunity to switch entirely to Qualcomm's chip that plays nicely with all networks.

Oddly, once they were torn apart, it was discovered that each different iPad told the same old story: The AT&T iPad 2 used an older Infineon baseband chip for GSM compatibility while the Verizon iPad 2 used the same Gobi MDM6600 chip that supports both GSM and CDMA.

This was an interesting move by a company that prefers simplicity to needlessly using two different components when one would have sufficed, but the move could have potentially been tied back to cost savings, supply constraints, or timing.

One chip to rule them all
Once the iPhone 4S was subsequently released with AT&T, Verizon, and Sprint compatibility and received similar teardown treatment, an upgraded version of that Qualcomm world-mode chip was found making itself comfortable -- the MDM6610.

This means that the iPhone 4S can run on almost all 3G networks in the world (sorry, T-Mobile), and Apple only needed to build one model instead of the two distinct ones before it. Since most 3G networks in the world are GSM, this also means that Verizon and Sprint iPhone users have more options to use their new gadgets while traveling abroad, which Apple's marketing was quick to point out.

The important part is that Apple ditched Infineon altogether, opting solely for the Qualcomm chip.

Back to the future
Now that we're all up to speed, Qualcomm has just released the fifth generation of its Gobi platform, which broadens its connectivity support to 4G technologies, along with backwards compatibility with good old 3G. These chips, the MDM9615 and MDM9215, will basically be able to handle any network you throw at it.

We're talking about GSM, CDMA, and both new flavors of 4G LTE. Frequency-Division Duplex, or FDD, LTE is used by most LTE networks, including the ones that Ma Bell and Big Red are in the process of building out domestically. Meanwhile, China has been developing its own variant, Time-Division Duplex, or TDD.

You might also note that China Mobile's (NYSE: CHL  ) 4G network will be of the TDD LTE variety and that the carrier has reportedly received a "positive answer" from Apple on compatibility. China Mobile is the largest mobile carrier not just in China, but in the world. It's also the last remaining major carrier to get the iPhone, after rivals China Unicom and China Telecom have already been invited to the iPhone party.

The imminent iPad 3 is allegedly set to have 4G LTE, with multiple outlets backing this rumor, and production may have started as early as October. That may seem like this fifth-generation Gobi may be too late to make it into the iPad 3, but Apple is known to lock down supply as soon as possible, so I wouldn't too surprised if Qualcomm and Apple have been working behind closed doors before these chips were released to the broader market.

In fairness, I'm the first to admit that I've been wrong with iDevice component predictions before, but I think the case for these Qualcomm chips is a lock for the next iPhone, and maybe even the iPad 3. Even if the iPad 3 doesn't sport these specific chips, it would almost certainly use another member of Qualcomm's Gobi lineup.

At least we won't be left guessing for long, since the iPad 3 is likely due out within weeks, and there will be no shortage of people willing to crack one open.

Component suppliers are among the most interesting and promising ways to play The Trillion-Dollar Revolution in mobile computing. They can be tougher to track down because they're buried inside the gadgets, but we've just named 3 Hidden Winners of the iPhone, iPad, and Android Revolution that saves you some legwork. Get the free report now.

Fool contributor Evan Niu has sold bullish put spreads on Qualcomm and owns shares of Apple, AT&T, and Verizon Communications, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of China Mobile, Qualcomm, and Apple. Motley Fool newsletter services have recommended buying shares of Apple, Intel, and China Mobile and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (2) | Recommend This Article (7)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 22, 2012, at 11:40 PM, bigriki wrote:

    blah blah blah blah blah, you left your conclusion a mystery for so long that I stopped caring

  • Report this Comment On February 23, 2012, at 11:25 PM, TMFNewCow wrote:

    I thought lawyers are supposed to have long attention spans?

    -- Evan

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