Apple orders Intel Modem Chips

[Arthur Hanson]

It looks like the contest between Intel and Qualcomm is on:

Apple Inc.’s next iPhone will use modems from Intel Corp., replacing Qualcomm Inc. chips in some versions of the new handset, a move by the world’s most-valuable public company to diversify its supplier base.

Apple has chosen Intel modem chips for the iPhone used on AT&T Inc.’s U.S. network and some other versions of the smartphone for overseas markets, said people familiar with the matter. IPhones on Verizon Communications Inc.’s network will stick with parts from Qualcomm, which is the only provider of the main communications component of current versions of Apple’s flagship product. Crucially for Qualcomm, iPhones sold in China will work on Qualcomm chips, said the people, who asked not to be identified because Apple hasn’t made its plans public.

Intel Gets Chip Order From Apple, Its First Major Mobile Win - Bloomberg

 

[Jozo035]

Does anybody know which modem they want to use?

Fastest Intel modem (from what i know) is "only" 450 Mbps but SD820 already has 600 Mbps and i am sure that SD830 will have 1 Gbps. So i don't understand why should Apple chose slower option.

Or it is just HOAX like before every release of Iphone in past years?

 

[tty2]

In before all the Intel naysayers here get salty

Is it so surprising the Intel gets a win that everyone has to write it off? Why be so eager for bad news and so skeptical of the good?

 

[Daniel Nenni]

In before all the Intel naysayers here get salty

Is it so surprising the Intel gets a win that everyone has to write it off? Why be so eager for bad news and so skeptical of the good?

It is a cry wolf thing. Intel has been rumored to have silicon in the iPhone for years so most of us are in the "I will believe it when I see it" mode:

Intel Said to Get Chip Order From Apple. Representatives for all of the companies declined to comment.

Let's not forget the iPhone 6 Intel modem news:

https://www.semiwiki.com/forum/f296/apple-iphone-se-teardown-soc-7551.html

And the Intel to make Apple SoCs:

https://www.semiwiki.com/forum/content/1882-apple-will-not-manufacture-socs-intel.html

 

[JeffreyHF]

The more interesting questions for me are "why", and at what competitive costs? We will never know whether Intel is essentially giving those modems away, like they did with their "contra revenue" boondoggle, in order to "buy" market share. Apple has never used QCT's most advanced modems, but the competitive landscape is different now, and the Android community is pushing more rapid refresh cycles, with greater integration and feature sets. We will have to wait and see what the relative power and performance profiles are, including battery drain, dropped calls, signal strength and capture in difficult locations, radio options and capabilities, and other characteristics, but Apple is clearly taking unnecessary risks, at a time when iPhone sales are lagging historical projections, and refresh cycles are being extended.

 

[Daniel Nenni]

The more interesting questions for me are "why", and at what competitive costs? We will never know whether Intel is essentially giving those modems away, like they did with their "contra revenue" boondoggle, in order to "buy" market share. Apple has never used QCT's most advanced modems, but the competitive landscape is different now, and the Android community is pushing more rapid refresh cycles, with greater integration and feature sets. We will have to wait and see what the relative power and performance profiles are, including battery drain, dropped calls, signal strength and capture in difficult locations, radio options and capabilities, and other characteristics, but Apple is clearly taking unnecessary risks, at a time when iPhone sales are lagging historical projections, and refresh cycles are being extended.

I agree completely. Modem speed is much more critical given the amount of data we push around now. I highly doubt cost is a priority over speed for Apple given their large margins. They do need a massive amount of chips so maybe availability is the problem.

Which Intel modem is this anyway? The one they bought from Infineon that is made by TSMC? Would Apple really pair a 28nm modem with a 16FFC SoC? Or is this modem made on Intel 14nm?

 

[JeffreyHF]

Supposedly, it is the XMM 7360, built on TSM's 28nm process. The XMM 7480 won't even sample until this Fall.

 

[count]

This would validate rumours from early 2015 that Intel would win 30% of the iPhone baseband orders. The same source also suggested that Apple would start putting the A10X in some Macbook models, specifically the Air. At the time, both rumours seemed pretty unlikely, but with the first prediction coming true I wonder if there is any chance that the next Air will indeed feature an A10X. The Air is at an interesting juncture right now, as the new Macbook competes directly with it. Apple could potentially reposition the Air as a cheaper mac with a $599 price tag. The other option for Apple would be to terminate the Air altogether, as it no longer really serves a purpose in the mac lineup.

KGI: Apple is designing its own Mac processors; Intel and Global Foundry added to Apple’s chipmaking stable | 9to5Mac

 

[hist78]

This would validate rumours from early 2015 that Intel would win 30% of the iPhone baseband orders. The same source also suggested that Apple would start putting the A10X in some Macbook models, specifically the Air. At the time, both rumours seemed pretty unlikely, but with the first prediction coming true I wonder if there is any chance that the next Air will indeed feature an A10X. The Air is at an interesting juncture right now, as the new Macbook competes directly with it. Apple could potentially reposition the Air as a cheaper mac with a $599 price tag. The other option for Apple would be to terminate the Air altogether, as it no longer really serves a purpose in the mac lineup.

KGI: Apple is designing its own Mac processors; Intel and Global Foundry added to Apple’s chipmaking stable | 9to5Mac

Let me do some simple calculation:

Assumptions:

1. Apple will sell 120 million units of iPhones in 2017 and Intel will provide 30% baseband chips.
2. For iPhone 6S, it costs Apple $13 per phone on the baseband chip provided by Qualcomm.
Source: Apple's iPhone 6s Plus Costs an Estimated $236 to Make -- $749 to Purchase - Recode
3. Assume Apple will pay the same amount of $13 for the new Intel baseband chips. Although I understand it's very unlikely due to Apple's price cutting practice.
4. Assume Intel won Apple's orders without offering any monetary incentive or giving Apple any discount on other Intel products (such as i5 and i7). Again, I think from Intel's history, Intel often makes monetary incentive or other concession when they need to gain market share, especially when they are not a dominant player in the market. But for now, let's just assume Intel didn't do any thing to convince Apple.
5. Assume the net profit margin of this new Intel baseband chip is 50%. Again, it's a very high net profit margin. But again, let's just assume this for easy calculation.

Possible Intel baseband product contribution in Intel net profit using 2015 net profit as the base:

$13 (baseband chip unit price) X 120,000,000 (2017 iPhone sales by units) X 30% (Intel's baseband chips share) X 50% (Intel's net profit margin on baseband chips) = $234 million (intel net profit generated from baseband chips on iPhones)

234 million / $11.4 billion (2015 Intel net profit) = 2.05%

So in the best scenario, Intel's baseband chips will only contribute 2.05% to overall Intel's net profit using 2015 Intel net profit as the base.

Is it too little and too late?

If Intel did offer monetary incentives to lure Apple to start using Intel's baseband solutions, then the net profit generated form Intel baseband chips will be even smaller!

 

[count]

Here is a conspiracy theory: Intel leaked this news as damage control for when a Macbook Air model running on the A10X is announced at WWDC.

 

[kingmouf]

Given that QCOM and others have a presence in the modem market and that consolidation of AP and modem is becoming the industry norm, what exactly Intel hopes to gain? Intel withdrew from the smartphone SoC market, so?

 

[lilo777]

Given that QCOM and others have a presence in the modem market and that consolidation of AP and modem is becoming the industry norm, what exactly Intel hopes to gain? Intel withdrew from the smartphone SoC market, so?

The consolidation that you are talking about is indeed happening for smart phone SOCs but wireless technology is used in more applications than just smart phones. And going forward (IoT and such) this trend will probably grow. That's why Intel considers modem/wireless tech to be a long term strategic investment.

 

[lefty]

The consolidation that you are talking about is indeed happening for smart phone SOCs but wireless technology is used in more applications than just smart phones. And going forward (IoT and such) this trend will probably grow. That's why Intel considers modem/wireless tech to be a long term strategic investment.

There are going to have to get off that obsolete 28nm process if they want anyone to take them seriously. The XMM 7360 was ment to be on 14nm, but it didn't happen. It would probably be easier to move to TSMC's 16 FFC, but they would lose face if they did that.

 

[benb]

There is a lot on Intel's plate right now: Bring out Altera 14nm FPGAs, bring out a new modem, ship processors which can utilize 3D XPoint memory, and ship improved Y-processors for tablets and the Macbook Air, fending off mobile-derived chips in those sockets. Since all of these things are currently vaporware, I'm content to wait for the actual products to be announced by the actual device makers, with actual reviews of the actual performance.

 

[Tom Simon]

So Intel Mobile has been losing money for years. They must have pushed really hard too get this win. Even if it was not significant to its bottom line, it is a big prestige win for the mobile group. If they are taking the long view, as they seem to be with mobile, this is a smart move.

And, it gives Apple a chance to second source components, giving them more bargaining power. Don't forget that Apple today is first and foremost a company that masters their supply chain. This has largely been the key to their success.