All depends on Apple
A recent report from Venture Beat claimed that the chip maker will supply the fast wireless modem chip for the 2016 Apple smartphone. As per the report, designers are probably working in Munich, Germany with Apple officials to complete the chip.
Citing Will Strauss, an analyst at the Mesa-based Forward Concepts, the Phoenix report claims that if these rumors turn out to be true, then Intel will get a solid reason to start utilizing its Fab 42 facility in Chandler. If the partnership reports are to be believed, then Apple will have to shun Qualcomm’s chips and start using Intel’s, which could mean a change for the Fab 42 factory in Chandler. The Fab 42 has been lying idle since its completion in 2013 as Intel decided to renovate two smaller factories nearby for chip manufacturing.
Intel lagged behind its competitors in finding a place in the mobile market, but in his newsletter, Strauss mentioned that the company is on the growth track on the back of new modems and processors for smartphones.
Will Intel lower chip prices?
According to Venture Beat, Intel is ready for “major” changes to pack LTE chips in iPhones, which would necessitate an advanced level of integration with Apple’s A series processors. Additionally, there are fair possibilities that the chipmaker will try dropping the price of LTE modems compared to Qualcomm to help Apple bring down the bill of materials for an “emerging market” iPhone.
If Intel brings down the price of its chips, it could sell modems to enhance its mobile revenue, which dropped 85% year over year to $202 million in 2014. However, such a strategy will not help bring down the division’s operating losses. The chip maker is making efforts to narrow its mobile losses by $800 million in 2015, but to achieve that, it should bring down the contra revenues, says a report from The Motley Fool.
At 10 a.m. Eastern today, Intel shares were down 0.31% to $30.50, while year to date, the stock is down by over 17%.