The next generation of the Apple iPhone will be powered by Intel’s modem, instead of chips produced by Qualcomm, the sole provider and powerhouse of iPhone’s communication component that processes voice and data signals.
Initially, the Intel modem will only be available in AT&T-based iPhones and in a few other models of the handset, according to Bloomberg. Other iPhone handsets by Verizon and other carrier companies will continue to have Qualcomm chips.
Apple’s switch to Intel chips has provided the processor manufacturer a major breakthrough for its mobile chip program that has long struggled with continuous operation losses to break into the space. For Apple, giving some of its business to Intel would help it diversify its supplier base and firm up its negotiating power.
Intel’s struggle to find its place in the mobile market goes back to 2007 when the company acquired Infineon Technologies AG, a company that provided the modem for the first model of iPhone. Its mobile ambitions were put to rest when Apple chose Qualcomm over Intel for the subsequent models of its flagship product. Since then, Intel has barely maintained a 1 percent market share.
Soon after the news broke, Intel’s share value rose 0.7 percent to $32.15. The rise came after a 7.3 percent decline in share value this year, Bloomberg reported. On the other hand, Qualcomm’s share value, which has been up 10 percent so far this year, took a 2.9 percent dip and closed at $53.40.
According to analyst estimates, Qualcomm earns close to $15 per iPhone handset and so would be looking at a loss of approximately $345 million next year as AT&T is expected to sell 22 million iPhones in 2016 and 23 million in 2017.
While the shift marks a serious loss for Qualcomm, it would still hold a majority of Apple’s business — most importantly, Apple’s rapidly growing Chinese arm. Qualcomm chips will continue to power iPhones sold in China.