In October, LG Electronics announced that it had developed its own applications processor solution for smartphones known as the "NUCLUN." In the press release for the processor, LG said, "NUCLUN is designed to support the next generation of 4G networks, LTE-A Cat. 6 for maximum download speeds of up to 225Mbps while retaining backward compatibility with current LTE networks."
From the wording in this statement, it appeared LG's semiconductor team had developed not only an in-house applications processor, but that this processor featured a sophisticated category 6 LTE-Advanced baseband processor.
However, new evidence suggests LG did not, in fact, build its own baseband, and that the word "supports" really means "the system-on-chip can be paired with an external category 6 cellular modem."
Intel's XMM 7260 makes another appearance
According to a screenshot posted on kenhcongnghe.vn, LG's G3 Screen phone, which features the NUCLUN system-on-chip, reports "XMM7260-1428.02" as the baseband version. This strongly suggests that the smartphone uses Intel's (NASDAQ:INTC) XMM 7260 LTE-Advanced stand-alone modem. While this phone is not likely to sell in volumes that would move the needle for Intel, it does further establish credibility for the chipmaker's stand-alone baseband efforts.
LG now, Apple later?
The Korea Herald in September published a quote from the president of Intel Korea, who claimed that "chances are high that global smartphone makers such as Apple (NASDAQ:AAPL) and LG Electronics will use Intel's baseband chips in their products down the road."
It seems that the executive's "prediction" is already beginning to play out. Now, do keep in mind that LG isn't using Intel's baseband processors in phones that are expected to ship in huge volumes. However, it seems that LG is receptive to using Intel-designed stand-alone chips paired with LG's in-house applications processors even though it could have just as easily gone with a stand-alone Qualcomm (NASDAQ:QCOM) modem.
In this situation, there's a decent chance the Intel executive might be right about his company potentially winning Apple business down the line, too. However, I do think that if Intel does win Apple, it won't be for another couple generations.
Apple needs a supplier that can deliver
There's a world of difference between a random LG phone released in a handful of regions and Apple's iPhone. In addition to assuring Apple a solution that works, Intel must make sure it can deliver competitive solutions on time.
For example, Intel had originally planned commercial availability of the XMM 7260 modem during the second quarter of 2014, but it didn't really begin ramping up until the third quarter. If Apple is going to take a risk on an alternative component supplier, it will need reasonable assurance that said supplier can deliver products on schedule.
Intel's mobile group has been getting better at this, but I don't think it's quite there yet.
When could we see an Intel-powered iPhone?
Apple seems to stick with the same cellular baseband for two generations, so I expect the iPhone 6s/6s Plus will continue to use the Qualcomm (NASDAQ:QCOM) MDM9x25 baseband. This means Intel's next chance at bat, so to speak, would come with the iPhone 7 that launches in 2016.
Intel claims it will introduce an integrated applications processor and baseband product built on its 14-nanometer manufacturing technology in early 2016. It would be surprising if Intel didn't have a highly capable stand-alone modem solution built on this technology.
Qualcomm is likely to have a competitive baseband built on Samsung's and/or Taiwan Semiconductor's respective 14/16-nanometer processes by then, but Intel could have a cost structure edge since it doesn't need to pay foundry margins and could thus offer lower prices to Apple.
It's still too early to know how this will all shake out, but winning an iPhone baseband slot in 2016 would be the ultimate validation of Intel's cellular development efforts. For now, though, Intel investors will need to content themselves with the fact that the company is making demonstrable progress as the No. 2 vendor of high-end cellular baseband solutions.