Compared to Apple's (AAPL 1.45%) colorful new plastic-backed iPhone 5c, Apple's new iPhone 5s is selling incredibly well so far.
We already know consumers gobbled up a record nine million iPhone 5c and 5s devices during the first weekend they were available, and a Localytics survey of 20 million iPhones conducted 72 hours after the launch showed the more expensive 5s represented 78% of all new iPhone purchases worldwide.
And why not? For $100 more, consumers can enjoy features including the twice-as-fast A7 processor, a fingerprint ID sensor, a metallic case, a better camera, and the intriguing M7 motion coprocessor.
The M7, for its part, has extremely interesting strategic implications, given its status as a stand-alone processor, most notably including its potential for future integration into wearable technology and health and fitness applications. What's more, unlike traditional accelerometers contained in many of today's smartphones, the separate M7 doesn't need to tie up the iPhone's main processor, so it can continuously analyze physical activity data -- even while the phone is asleep -- in a much more power-efficient manner.
Down the road, according to the astute minds at MIT Techology Review, the M7 could even allow Apple's devices to incorporate more sophisticated gesture control or, when combined with other sensors, afford it the ability to anticipate users' needs or evaluate their emotional states based on physical motion data.
Here's how you can profit
Curiously enough, the M7 at first proved difficult to find during initial iPhone 5s teardowns, causing some to doubt it even existed.
iFixit, for example, quipped during its own teardown:
Maybe the "M" stands for "magical," the M7 is invisible, and Apple does use pixie dust to hold the device together. Or perhaps the "M" stands for "marketing"...
That was, at least, until ChipWorks was able to locate the M7 in the form of NXP Semiconductor's (NXPI 2.65%) LPC18A1 microcontroller.
So why's this notable?
The ChipWorks' report also noted they weren't able to find any specific part in NXP's LPC range of products which exactly matched the LPC18A1, so came "to the tentative conclusion that this is likely a [customized] LPC18xx chip built for Apple." In short, this means Apple has effectively rebranded NXP's chip as their own widely publicized M7.
If you recall, NXP Semiconductor has long been viewed as a steady play on near-field communications chips, or NFC, which Android-driven smartphone companies like Samsung and Google (GOOG 2.30%) have long relied on as a key differentiator. However, some have worried Google could be losing interest in NFC of late, especially since it not only just removed the requirement to use NFC in its Google Wallet app for iOS, but also just acquired the file-sharing app Bump less than two weeks ago. Bump, for its part, doesn't rely on NFC, and has been available on iOS for around five years now.
Meanwhile, Apple has largely refused to support NFC in lieu of its alternatives, which include its Bluetooth-enabled iBeacon functionality and the newly introduced AirDrop feature, which uses Wi-Fi to do its handiwork.
In the end, even without Apple's support of NFC, the M7 is a huge win for NXP Semiconductor, and removes one big uncertainty regarding its future as a stalwart in the industry. That's why, especially given the possibility of the M7 finding a home in more of Apple's ground-breaking tech down the road, I'm convinced patient investors who own shares of NXP today will be handsomely rewarded over the long haul.
