Intel Corporation Should Fight for Apple's Business

With a solid modem in hand, Intel should fight aggressively to get inside the iPhone.

Feb 24, 2014 at 6:30PM

Back in 2010, Intel (NASDAQ:INTC) announced that it would be acquiring the assets of the struggling Infineon Wireless. Intel recognized that it would need to have in-house cellular baseband and RF transceiver capability if it were to become a viable player in the smartphone and tablet chip market.

Intel actually didn't pay all that much for it -- a mere $1.5 billion -- but it came cheap because it was in pretty bad shape. After three years, Intel may finally be in a position to win a big-ticket phone, such as the Apple (NASDAQ:AAPL) iPhone.

Intel can target a number of Apple's many SKUs
Looking at the specifications of Intel's XMM 7260, it seems that it is a competitive product with Category 6 LTE-Advanced support. The only deficiency that it seems to have regarding the upcoming Qualcomm (NASDAQ:QCOM) MDM9x35 is that it doesn't support the CDMA standard. While this may seem like a problem, it's important to understand that Apple has no less than five SKUs of its highest-end iPhone 5s, three of which don't offer or require CDMA support.


Source: AnandTech.

Apple is probably going to use Qualcomm for all of its high-end iPhones, CDMA or not. But it is very possible that Intel could end up powering the non-CDMA versions of the successor to the iPhone 5c, as Intel is probably going to be very aggressive with the pricing of its chips. This would not only be a win for Apple, but it could be a win for Intel, as winning a baseband socket might be more lucrative than winning a portion of Apple's A chips as part of a foundry deal.

Long-term, this is the Apple account worth fighting for
Over the long haul, Intel's best shot at penetrating Apple and Samsung will be via stand-alone cellular baseband processors, as the two heavyweights seem to be keen on developing their own applications processors. Competing with Qualcomm is tough business -- and Broadcom appears to be emerging as a viable contender for non-CDMA baseband sockets, although it seems to be behind Intel as far as timing goes. But Intel is finally in a position to start fighting for this business, something that Infineon Wireless as a stand-alone entity was not able to do.

Having some non-trivial percentage of Apple's baseband business and then a decent percentage of the non-Apple/non-Samsung smartphone applications processors isn't bad business by any measure. Smartphone revenue for Intel may not ever come close to what Intel gets on the PC side of things, but this is fantastic incremental business and could drive some nice long-term growth.

Foolish bottom line
So this is interesting from a number of angles. Intel, the company known for missing mobile, will finally be able to compete for a socket at Apple. Qualcomm, for the first time in a long time, sees competition at the leading edge of the baseband market, and Apple gets to pit the suppliers against each other in order to get a better cost structure. Interesting times are ahead for all involved.

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Ashraf Eassa owns shares of Intel. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.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.

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