In its 2016 and 2017 flagship iPhone products, Apple (NASDAQ:AAPL) used cellular modems sourced from both wireless leader Qualcomm (NASDAQ:QCOM) as well as challenger Intel (NASDAQ:INTC). This meant that for those two product generations, the advertised cellular capabilities of the devices were limited to what Intel's modems could deliver.
Then, earlier this year, Apple announced three new iPhones, all of which are powered exclusively by Intel's XMM 7560 LTE modem. It was possible for Apple to use Intel modems in all its iPhones because Intel added support for the CDMA and EVDO standards in the XMM 7560, allowing devices powered by the modem to be used on networks that utilize those standards. Last quarter, Intel reported that its modem revenue grew 131% from the same period a year ago.
Just recently, Intel published a product brief for its upcoming XMM 7660, which I expect Apple will use in its 2019 iPhone lineup. Let's look at the implications for those devices.
A large download boost
Intel says that the XMM 7660 supports "LTE Advanced Pro speeds up to 1.6 [gigabits per second] download and 150 [megabits per second] upload."
According to the company, the XMM 7560 solution that's currently being shipped supports speeds "exceeding 1 [gigabit per second] download and 150 [megabits per second] upload." So, at least on paper, peak download speeds go up by about 60% while peak upload speeds stay the same.
What this all means is that when Apple announces its new flagship iPhones in less than a year, it will be able to tell customers that the new devices support much faster download speeds than the previous generation did.
A big jump in simultaneous LTE band support
Apple has been using Intel's LTE modems for three generations now, starting with the XMM 7360 in 2016, moving to the XMM 7480 in 2017, and the XMM 7560 this year. With each successive generation, the number of simultaneous LTE bands that the company's modems support has steadily risen.
|Intel LTE modem||XMM 7160
||XMM 7360||XMM 7480||XMM 7560||XMM 7660|
|Simultaneous LTE band support||15||22||29||>33||>35||>45|
Back in 2015, analyst Pat Moorhead explained that because Apple's iPhone 6 and iPhone 6 Plus came in variants that "in some cases support 20 Bands at the same time," this "gives Apple the ability to support many regions at once and simultaneously gives consumers the freedom to switch between carriers freely as well as travel internationally without too much concern for coverage."
With the XMM 7660, Intel seems to have delivered its biggest jump yet in the number of simultaneous LTE bands that it can support in a single phone SKU.
Another detail is confirmed
A little while back, analysts with Bernstein Research claimed that the baseband processor that would be part of the XMM 7660 solution would be manufactured using Intel's 14-nanometer (nm) technology. That's the same technology used to build the XMM 7560's baseband processor, known as the X-GOLD 756.
As it happens, the analysts were right, and Intel confirmed in its product brief that XMM 7660's baseband -- known as the X-GOLD 766 -- is also crafted using 14nm technology. Intel didn't specify in its XMM 7660 brief that it was referring to its own 14nm technology, as it had in the XMM 7560's product brief. But the company tells me that this, in fact, refers to Intel's own 14nm technology.
Over the span of three generations, Intel has evolved from a second source in Apple's latest iPhones to its sole source. That has added noticeable revenue to the company's client computing group. And according to interim CEO and CFO Bob Swan, the growth in modem shipments is "accretive to [Intel's] year-on-year earnings growth," though he conceded that it's "dilutive to [Intel's] gross margins".
Intel now needs to hang on to its sole-source position in iPhones. This means that the company must continue to successfully crank out modems that keep pace with Apple's annual iPhone product lineup. Over the next couple of years, that will entail delivering on the XMM 7660 and making sure the roll-out of its first 5G modem -- known as the XMM 8060 -- goes smoothly.