Chip giant Intel's (NASDAQ:INTC) cellular modem business caught a big break when Apple (NASDAQ:AAPL) decided to use its products in the iPhone 7 and iPhone 7 Plus smartphones that launched in the second half of 2016. Since then, Intel and Apple seem to have tightened their modem-related business relationship, with Apple opting to use Intel's modems exclusively in its recently announced trio of iPhones. 

In addition to this being the first iPhone product cycle to use modems exclusively sourced from Intel, the modem that Apple is using in these devices, known as XMM 7560, is the first to incorporate a cellular baseband processor manufactured by Intel itself. Previous Intel modems were manufactured by third parties.

An Intel XMM 7560 modem next to an eraser and a penny.

Image source: Intel.

I reached out to teardown specialists TechInsights, who recently published a teardown report of the iPhone XS Max, and asked them if they'd be willing to share the size of the baseband processor that's part of the XMM 7560 modem (called X-GOLD 756). They were kind enough to oblige. Let's take a look at that figure and why it matters. 

It's a small chip

TechInsights tells me that the X-GOLD 756 baseband features dimensions of 7.15 millimeters by 7.98 millimeters, for an area of 57.06 square millimeters. In the table below, I've included this data alongside the sizes of Intel's previous baseband processors: 

Baseband X-GOLD 756 X-GOLD 748 X-GOLD 736
Die size (square millimeters) 57.06 70.45  65.30 
Manufacturing technology Intel 14nm  TSMC 28nm  28nm 

Source: Die sizes from TechInsights, manufacturing technologies from TechInsights and Intel, compiled by author.

You'll notice that the X-GOLD 756 is about 19% smaller than the X-GOLD 748 and about 12.6% smaller than the X-GOLD 736. Now, you might be thinking to yourself, "Since X-GOLD 756 is manufactured on a much more compact manufacturing technology, why isn't it much smaller than its predecessors?" 

The answer to that question is that while the X-GOLD 756 is built on a technology that's substantially denser -- meaning that the area of an individual transistor in Intel's 14nm (nanometer) technology is much smaller than that of a transistor built in any 28nm technology -- Intel likely needed to use far more transistors to build the X-GOLD 756 than it did when it designed its predecessors to support the enhanced features and performance that the XMM 7560 solution delivers. 

"The iPhone XS is a huge step up from the iPhone X when it comes to LTE download speeds, according to exclusive new data from Cellular Insights and Ookla Speedtest," PCMag writes. (The publication did note that the iPhone XS' cellular speeds still fell short of the Qualcomm (NASDAQ:QCOM) Snapdragon X20 modem-based Galaxy Note9, however.)

Looking ahead

Intel's next cellular modem is called the XMM 7660, and the baseband processor that'll be part of that modem is probably going to be called the X-GOLD 766. Intel hasn't disclosed what manufacturing technology the X-GOLD 766 will be built using, but according to analysts with Bernstein Research, the X-GOLD 766 will be manufactured using 14nm technology, just as the X-GOLD 756 is. 

If this is true, it wouldn't be the first time that Intel has used the same manufacturing technology generation for multiple products (Intel's X-GOLD 726, X-GOLD 736, and X-GOLD 748 were all built using 28nm technology). It'd also mean that when TechInsights does its teardown of next year's iPhones, it should find a baseband that's larger than X-GOLD 756 is (notice that the X-GOLD 748 was almost 8% larger than the X-GOLD 736 using the same manufacturing technology). 

Another thing that's worth pointing out is that if the X-GOLD 766 is built using Intel 14nm technology and Intel wins the entirety of the iPhone modem orders again for the 2019 models, it'll need to dedicate more 14nm manufacturing capacity to building baseband chips for the iPhone. The potential growth in chip size in the X-GOLD 766 relative to the X-GOLD 756 should mean that, all else being equal, Intel will need to run more wafers to produce the same number of chips.

Additionally, only Apple's latest iPhone models use chips built using Intel's 14nm technology. However, I expect that next year, today's iPhone XR will replace the current iPhone 8 and iPhone 8 Plus (which use either Qualcomm chips or Intel chips built using a third-party 28nm technology), leading to an increase in the number of modems manufactured using Intel's 14nm technology that Apple will need to support the next product cycle (again, assuming that the X-GOLD 766 is built using Intel's 14nm technology.)

Ashraf Eassa owns shares of Qualcomm. The Motley Fool owns shares of and recommends Apple. The Motley Fool owns shares of Qualcomm and has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.