Intel may have signed a deal with Apple to supply half of the processors for the next-generation iPhones, which are expected in September, claims Northland Capital analysts. The chip maker has been assigned a Market Perform rating with a price target of $32 by the Northland analysts.
A big win for Intel
For quite some time now, there have been rumors of Apple thinking about using Intel chips for its iPhones, but now it seems the chip maker has finally gotten it done. The analysts believe the chip maker could earn $1 billion with the help of the Apple deal.
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“This is a marquee win for Intel and would go a long way to reducing the mobile business losses,” the analysts noted.
Intel has been dominating the desktop, laptop, and server processor sectors, but when it comes to smartphones and tablets, it’s a different story. Currently, the majority of smartphones are based on the ARM architecture, including the iPhone. Earlier this year, the chip maker combined its PC and mobile chip groups into the Client Computing Group, likely to hide the mobile business losses. In the last quarter, this group earned around $1.6 billion, which was a decline of 38% from the prior year.
For Intel, which has been struggling to make a mark in the mobile segment, signing a deal with a client like Apple is a big win. The deal will help the chip maker to win a reasonable position in the mobile business.
Will Apple settle for “second best technology”?
For years, Apple has been using Qualcomm chips, but in March, VentureBeat reported of an “uneasy relationship” between the two. For Qualcomm, which announced a 15% cut in the workforce recently, revenue in the last quarter was down 14% from last year.
However, principal analyst at Tirias Research Kevin Krewell is doubtful over the Northland claims. Krewell told EE Times that Qualcomm makes the best mobile chips in the market, and since iPhone is a premium phone, Apple may not go for the “second best technology.”
“The only role I can see for Intel’s modem would be a second tier phone like an iPhone 5C replacement, which could be reasonable volume, but at a much lower average selling price,” Krewell added.