At the Mobile World Congress earlier this month, Intel (NASDAQ:INTC) announced its next generation wireless connectivity solutions. Among these was a category 10 LTE-Advanced cellular modem known as the XMM 7360, slated to ship in commercially available devices in the second half of 2015.
Although its technological progress on modems has been impressive, I wonder how much of a market exists for these Intel high-end standalone modem solutions.
It would have been nice to pair this with an applications processor
The XMM 7360 is an impressive modem, but since Intel does not have a suitable internal applications processor to pair it with due to the delay of Broxton, the company will have to sell modems to customers that build their own processors.
Well, companies that use Qualcomm applications processors will probably use either standalone or integrated modems. Ditto for MediaTek, which plays more in the low-end and mid-range where integrated solutions are dominant. This means the only potential customers for the XMM 7360 are the following kinds of companies:
- Those that build their own applications processors but do not have internal modem efforts, and
- Those that build their own applications processors but do not have modems that are certified in regions where Intel modems have been
The device makers fitting this bill that come to mind are: LG, Samsung, and Apple.
Will any of these vendors use it?
LG used the XMM 7260 in a phone with its own applications processor, but this was not a particularly high volume design. The company, meanwhile, still uses integrated Qualcomm Snapdragon parts all over the place. Perhaps if LG releases a more competitive applications processor solution than its initial NUCLUN (which was pretty uncompetitive), then the company can use the XMM 7360 paired with its own solutions more broadly.
However, given the performance of its first solution, I think it will be a few more iterations before LG can use its own applications processor in more meaningful quantities. This means any major opportunity for high-end standalone modems at LG might also be a long ways off.
Samsung used the XMM 7260 in some variants of the Galaxy Alpha and the Galaxy Note 4, according to Intel, and I would not be surprised if even the newly announced Galaxy S6 had some XMM 7260-powered variants. I would expect the next generation Galaxy Note 5 to also come in variants powered by a Samsung Exynos processor paired with the Intel XMM 7260 modem. That said, Intel would be one of many suppliers (including Qualcomm and Samsung itself), so the volumes would not be huge.
Finally, there is Apple. There has been some press chatter about Apple potentially dual-sourcing from Qualcomm and Intel on the cellular baseband side of things, although the timing of such a shift, if it even happens, is unclear. I think Apple would be an interesting candidate for Intel, particularly as Apple would benefit from a more competitive cellular baseband environment.
We will see, though, if Intel can score a spot inside the updated iPhone, or if Qualcomm keeps that socket all to itself. Signing Apple would be a huge win for Intel and its stand-alone modem business. No other customer could bring the kind of volumes that Apple can.
It is the integrated parts that are interesting
The vast majority of the market that Intel can pursue (low-end, mid-range, and even non-Apple/Samsung high-end phones) requires integrated solutions. That said, landing some big customer wins with its standalone modems would justify Intel's continued investment in standalone modems.
If Intel cannot land the business of these few potential customers, then the company might be better off focusing completely on integrated solutions.
Ashraf Eassa owns shares of Intel and Qualcomm. The Motley Fool recommends Apple and Intel. The Motley Fool owns shares of Apple and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.