Last year, I penned a piece speculating that since Intel (NASDAQ: INTC ) has a pretty good discrete modem road map, it may have a shot of winning back cellular baseband business at Apple (NASDAQ: AAPL ) . Along those lines, Cowen semiconductor analyst Timothy Arcuri believes that Intel and Apple are in talks about a potential cellular baseband supply deal for the iPhone 6s (2015 iPhone).
Apple probably wants a viable second source
The iPhone is the single biggest profit driver for Apple. This means that quality and performance are paramount, but that maintaining a favorable cost structure to keep profitability high is also important.
Until very recently, Apple has not had a viable alternative to Qualcomm for its smartphones. The companies' relationship seems to be strong, but there's no doubt that having a second source would allow Apple to -- at the very least -- get some meaningful price concessions from Qualcomm (thus improving Apple's margins).
What does Intel's modem roadmap look like?
At this year's Intel Developer Forum in Shenzhen, China, Intel showed a very vague stand-alone modem road map (pictured below).
Apparently, Intel plans a next-generation LTE-Advanced modem at some point in 2015. The modem should support Category 7 LTE-Advanced, both TDD/FDD LTE modes, TD-SCDMA, as well as 3GPP Release 11, putting it on feature parity with the improved MDM9x35 block found inside of the Qualcomm Snapdragon 808/810 scheduled to hit devices next year.
The unanswered question
One of the most important uses for a smartphone is surfing the Web while on the go. In these situations, the cellular modem is doing quite a bit of work. This means that for longer active battery life, the modem needs to be as power-efficient as possible -- something enabled by more advanced semiconductor technologies.
If the follow-on to Intel's latest XMM 7260 modem (which is built on 28-nanometer for the baseband and 65-nanometer for the RF) is built on the Intel 14-nanometer process, then it should have extremely favorable performance and power characteristics. If Qualcomm does not transition to 16 FinFET for its stand-alone modem during the second or third quarters, then Intel could be at a material power consumption advantage.
That said, if this is another 28-nanometer part (and some fairly dated leaked road maps suggest this is the case), then not only will Intel be behind the 20-nanometer part available today, but Qualcomm may even transition to 16 FinFET for its follow-on to the MDM9x35. Wouldn't that be ironic?
What's the verdict on this rumor?
If Apple is going to select Intel as a cellular chip provider, then Intel is going to need an edge. Building a world-class 14-nanometer stand-alone baseband that is ready to go for a 2015 iPhone would be a huge win for the chipmaker.
However, given that at least one leaked road map out there claims that Intel's next-generation modem is yet another 28-nanometer part with rough feature parity to Qualcomm's recently released MDM9x35, it would be prudent to keep expectations low.
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