In a report from KGI Securities' Ming-Chi Kuo, the analyst makes a number of predictions with respect to Apple's (NASDAQ:AAPL) chip-sourcing plans. In a prior article, I went into significant detail about the analyst's prediction about Apple booting Intel (NASDAQ:INTC) from the Mac. In this article, I'd like to explore another Intel-related claim made in the same report.
In particular, I'm referring to the claim that Intel may supply cellular baseband processors for a portion of Apple's 2016 iPhone. Does it pass the smell test?
What's the claim?
Kuo predicts that the 2015 iPhone and cellular iPad models will feature Qualcomm's (NASDAQ:QCOM) MDM9635M cellular baseband exclusively. This is a 20-nanometer part with category six LTE-Advanced support (300 megabits per second download, 50 megabits per second download) -- twice the download speed of the MDM9615M found inside of the iPhone 6/6 Plus.
Where things get interesting, though, is what Kuo is claiming for the 2016 iPhone. The report claims that approximately 30% of the iPhone 7 will ship with Intel's XMM 7360 solution, while the remaining 70% will feature Qualcomm's MDM9645M.
Both solutions support category 10 LTE-Advanced, and I believe that both the Qualcomm and the Intel solutions will be fairly mature solutions for a Sept. 2016 iPhone launch. It seems possible that Apple could be using Intel as a second source for cellular basebands, particularly as Apple might be getting favorable pricing by playing both vendors against each other (a common supply-chain tactic).
I do have one reservation about this potential arrangement.
The Qualcomm chip is likely to be more efficient than the rumored Intel one
While those familiar with the semiconductor industry are aware that the performance and power efficiency of a chip depends heavily on the underlying design of the chip, the actual transistor technology from which those designs are built are equally important. To my knowledge (based on leaked Intel roadmaps), the XMM 7360 is a 28-nanometer part.
Even if Intel and Qualcomm had equally skillful implementations, the 20-nanometer manufacturing technology should give Qualcomm a power efficiency edge. I don't know how large this edge would be, or the impact it could potentially have on battery life, but it would likely exist.
The XMM 7460 would be a much more competitive part
While Kuo claims that Apple may use an Intel baseband starting with the 7360 for the 2016 iPhone, I believe that it might make more sense for Apple to actually use the follow-on part known as the 7460. According to leaks, this will be a part built on Intel's leading-edge 14-nanometer manufacturing process. This should offer very compelling power efficiency relative to either the 20-nanometer Qualcomm chip, or the 28-nanometer 7360.
Of course, execution would be critical for Intel, here. It would need to have this part carrier-certified and ready for mass production by the end of 2015/early 2016 to safely hit the iPhone 7 launch time frame. Intel's execution in modems is getting better, but I'm not sure it's there yet.
I do expect Qualcomm to have its next generation 14/16-nanometer cellular baseband out and ready to go by the time the iPhone 7 hits the market. Intel's edge here, though, would be that it runs its own 14-nanometer factories, and by the time the iPhone 7 is expected to launch, Intel's 14-nanometer process should be very mature -- implying a good cost structure for Intel.
I believe that this will ultimately give Intel a cost structure advantage, which it then can translate into a pricing advantage against Qualcomm in vying for the new iPhone. I'd expect Qualcomm to get aggressive on pricing to keep as much of the iPhone shipments as possible; but if Intel can put out a compelling part on time for cheap, then I think there's a decent chance that the iPhone 7 could feature the 7460 -- at least in some configurations