Intel has recently been reported to have gotten its biggest win in the mobile segment. According to Bloomberg, Apple will not be using Qualcomm chips in some versions of the new iPhone 7 and instead will use Intel-made chips in a move to diversify its supplier base. If this is true, there is a big question: where will these chips be produced?
Apple chooses Intel chips for some versions
Citing an informed source, the Irish Independent says the chips for the iPhone will likely be made in China instead of Ireland. An Intel spokesperson in Ireland refused to comment. It must be noted that last month, Intel started a redundancy program in Ireland as part of a global staffing reduction.
People familiar with the matter said the Cupertino-based giant has chosen Intel’s modem chips for the iPhones used on AT&T’s U.S. network and a few other versions of the iPhone for some overseas markets. Apple’s iPhone on Verizon’s network will stick with Qualcomm, which is the only provider of the main communications component for current versions of Apple’s flagship product.
The source, who asked not to be identified because the tech giant has not yet made any plans public, said the iPhones sold in China will work on Qualcomm chips. As of now, there has been no comment from representatives of any of the firms named in the Bloomberg report.
A big loss for Qualcomm
A contract from Apple represents the first major win for Intel’s mobile chip program, which has racked up operating losses and struggled for years. This new achievement will further dent Qualcomm’s dominance in baseband processors. However, Qualcomm still retains a major chunk of Apple’s business even though it is losing some orders. Right now, Qualcomm’s major concern is that it might lose one of its largest customers.
On an earnings call in April, Qualcomm chief executive Steve Mollenkopf said he was assuming a major customer would turn to multiple suppliers.
According to Walt Piecyk, an analyst at BTIG LLC, AT&T will sell an estimated 22 million iPhones in 2016 and 23 million in 2017. Piecyk estimates that Verizon will sell an estimated 21 million iPhones in 2016 and 22 million next year. In fiscal 2015, Apple sold more than 231 million units worldwide
On Tuesday, Intel shares closed down 0.09% at $32.14. Year to date, the stock is down by over 8%, while in the last year, it is up by over 11%.