Please ensure Javascript is enabled for purposes of website accessibility

Why I'm Less Confident That Apple Inc.'s New iPhone Will Have Intel Corp. Inside

By Ashraf Eassa - Jan 13, 2016 at 11:30AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A mid-range iPhone probably wouldn't use Intel's latest, or even last-generation, modem.

A recent report from tech news website Fudzilla claimed that Intel (INTC 0.25%), whose efforts in the market for mobile processors have generally been less than inspiring, would win the cellular modem spot inside of Apple's (AAPL 1.14%) upcoming 4-inch iPhone refresh.

Up until now, it had been widely believed that Apple's next-generation 4-inch smartphone would feature flagship internal specifications (A9 processor, two gigabytes of LPDDR4 memory, etc.). However, a fresh report from Chinese website cnBeta (via MacRumors) suggests that the device will actually be more like an iPhone 6/6 Plus stuffed into a 4-inch metal casing.

If this is accurate, I am inclined to believe that Intel's chances of providing a cellular modem into this phone are quite low. Here's why.

Apple unlikely to use an iPhone 6s/6s Plus-class modem in such a device
The new 4-inch iPhone is expected to feature the same A8 chip and one gigabyte of system memory found in the iPhone 6/6 Plus, which -- if true -- would likely be for both cost (older components are cheaper) and segmentation (Apple wants to give people reasons to buy the latest flagships) reasons.

If this winds up being the case, then I see no reason for Apple to use the same cellular modem that it uses inside of the iPhone 6s/6s Plus or a modem with similar capabilities from an alternative supplier. Instead, I would expect Apple to largely carry over the wireless solution present in the iPhone 6/6 Plus.

Although Apple could technically source chips from Intel that offer roughly comparable download/upload speeds (the solution is known as the XMM 7160 and it was Intel's first LTE solution), the Qualcomm (QCOM 0.23%) MDM9625 baseband that Apple employed in the iPhone 6/6 Plus is superior in many ways to the comparable Intel XMM 7160 solution. Indeed, the XMM 7160 gained very little traction in the marketplace and Intel worked quickly to roll out its follow-on, the XMM 7260. 

All in all, if the upcoming 4-inch iPhone is really more along the lines of the iPhone 6/6 Plus in terms of internal specifications than the iPhone 6s/6s Plus, then I wouldn't count on Intel winning the spot.

We could learn more once Intel reports its financial results
Intel is reporting its financial results and guidance for the first quarter of 2016 on Jan. 14, which is just a couple of days away as of this writing. The new 4-inch iPhone is said to be in mass production right now at Foxconn. Since component vendors need to ship parts in advance of product launch, if Intel is inside of this new 4-inch iPhone, it is almost certainly shipping cellular modems as well as other companion chips to Apple as we speak.

Even if Intel were to win, say, just half of the order allocations for the new small iPhone, I'd imagine that this would still likely represent much higher volume orders than all of the company's other stand-alone modem orders combined. Such an order would likely lead to a meaningful boost in its mobile-related revenue and could even serve to help the chip giant narrow the still-significant losses that it's incurring in its pursuit of the mobile chip market.

If Apple's next iPhone really will have Intel inside, I think investors might be able to figure it out from Intel's first-quarter earnings results -- assuming, of course, that management provides an update on the revenue and profitability trends of its mobile business. 

Ashraf Eassa owns shares of Intel and Qualcomm. The Motley Fool owns shares of and recommends Apple and Qualcomm. The Motley Fool recommends Intel. 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$167.23 (1.14%) $1.88
Intel Corporation Stock Quote
Intel Corporation
INTC
$35.48 (0.25%) $0.09
QUALCOMM Incorporated Stock Quote
QUALCOMM Incorporated
QCOM
$150.55 (0.23%) $0.34

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/08/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.