Intel May Supply Half of the Modems for the Next iPhone

May 17, 2016, 1:20 PM UTC
Photograph by Bloomberg via Getty Images

Intel’s lagging mobile chip business may get a bigger boost than previously expected from Apple’s next iPhone update.

Analysts had expected Intel might supply 25% to 30% of modems in the unannounced but widely anticipated next iPhone. But a new report from DigiTimes, citing unnamed industry sources, says Intel might garner up to 50% of the modem business. Apple declined to comment.

With Apple (AAPL) expected to sell 150 million to 200 million new iPhones over the following year, that could add up for Intel, which has seen its mobile efforts largely crushed by competitors including Qualcomm (QCOM) in the modem market. Apple makes its own central processing chips for the iPhone based on ARM designs.

In another unusual twist, the report said Intel (INTC) would hire Taiwan Semiconductor Manufacturing (TSM) to make the modem chips.

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Shares of Intel, which have lost 12% so far this year, were unchanged in pre-market trading on Tuesday. Shares of Qualcomm, up 4% in 2016, traded down 1% in Tuesday pre-market action.

Qualcomm CEO Steven Mollenkopf last month said he was anticipating the loss of some sales with “large customers” that were seeking a second supplier of key chips—but he did not name Apple or Intel.

Intel lost $7 billion on its mobile chip business from 2013 through 2014 before wrapping the unit into its larger and more profitable PC chip segment last year. Then, after CEO Brian Krzanich announced a huge shake up in April, came word that Intel was discontinuing some of its low-end mobile chip lines, though not the modem expected to be used in the next iPhone.