Please ensure Javascript is enabled for purposes of website accessibility

Will Apple Offer 5G iPhones in 2019?

By Ashraf Eassa - Feb 27, 2018 at 2:10PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Looking ahead.

Apple (AAPL 2.45%) is expected to launch three new iPhones later this year: a successor to the current iPhone 8 and iPhone 8 Plus (a device that I believe will simply be called "iPhone"); a successor to the current iPhone X; and a larger-screen version of the successor to the iPhone X, which I'll refer to as the iPhone X Plus.

All three new iPhone models are expected to support gigabit LTE speeds, enabled by Intel's (INTC 3.21%) new XMM 7560 modem. Apple's latest iPhone models support peak download speeds of 600 megabits per second, so the jump -- at least on paper -- should be quite significant.

Next year, many smartphone vendors are expected to introduce smartphones with support for the wireless standard that succeeds 4G LTE, known as 5G. Indeed, wireless chip specialist Qualcomm (QCOM 4.17%) recently announced a list of partners that intend to sell smartphones powered by its upcoming Snapdragon X50 5G modem.

There is some speculation that Apple may be late to offer iPhones with 5G connections, something that wouldn't be without historical precedent. Apple was also late in offering 4G LTE-capable smartphones, though it's worth noting that its ability to invest in new technologies has grown by leaps and bounds over the last seven years.

However, I think that there's a good chance that Apple will offer 5G-capable iPhone models in the second half of 2019, especially as it faces the risk of falling behind the competition if it doesn't. Here's how I expect Apple to do it.

Apple's iPhone X lineup

Image source: Apple.

5G for the iPhone X line, LTE for the standard iPhone

I think that for the 2019 iPhone lineup, Apple will continue to segment its devices based on price. At the high end, I expect direct successors to what I think will be this year's iPhone X and iPhone X Plus. For the mainstream, it seems reasonable to bet on Apple introducing a cost-optimized successor to what I'm calling simply the iPhone.

I believe the standard iPhone won't come with a 5G modem and will instead -- to save on costs and drive effective product segmentation -- use an upgraded LTE modem from Intel, the XMM 7660.

Intel's XMM 7560 LTE modem next to a penny and a pencil eraser. The model is smaller thant the penny; bigger than the eraser.

Image source: Intel.

The successors to the iPhone X, however, could come with 5G modems. Apple could use a solution from Qualcomm, or Intel's upcoming XMM 8060 5G modem (which Intel says will "ship in commercial consumer devices in mid-2019"). Perhaps Apple could even sell some with Intel modems and others with Qualcomm modems, as it does with the iPhone 7-series, iPhone 8-series, and iPhone X smartphones.

From a risk-management perspective, it might be smart for Apple to use multiple modem suppliers in the early innings of the 5G transition, in case one fails to deliver.

Not only would limiting 5G capability to the more expensive models make sense from a financial perspective -- cheaper devices get less sophisticated cellular subsystems while more expensive devices get more advanced ones -- but it would also be helpful from a product segmentation perspective.

Apple will want to find ways to drive iPhone average selling prices as high as possible, to drive revenue growth in a stagnant smartphone market. By limiting 5G capabilities to its most expensive devices, the company would be giving customers a reason to buy higher-end smartphones.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$141.66 (2.45%) $3.39
QUALCOMM Incorporated Stock Quote
QUALCOMM Incorporated
QCOM
$125.10 (4.17%) $5.01
Intel Corporation Stock Quote
Intel Corporation
INTC
$38.61 (3.21%) $1.20

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.