Report: Some of Apple's next iPhones will use LTE chips from Intel

The next versions of Apple's (NASDAQ: AAPL) iPhones will include an LTE modem chipset from Intel, according to a VentureBeat report, a move that would give a major boost to Intel's wireless ambitions and hit Intel rival Qualcomm (NASDAQ:QCOM).

The report, citing unnamed sources familiar with the matter, said Intel's new 7360 LTE modem chipset will sit inside the new iPhones in a space long reserved for Qualcomm, which is the leader in the wireless baseband market, particularly for LTE.

However, the report makes clear that Qualcomm's LTE modem chips are likely still going to be in the next iterations of the iPhone, which will probably be introduced in September. The report notes that the Intel 7360 chip will ship inside a special version of the iPhone that will be marketed to emerging markets in Asia and Latin America.

Apple and Intel declined to comment, according to VentureBeat.

Despite the relatively limited target market, an Intel chip in an iPhone would still represent a significant win for Intel, which has been aiming to get its silicon inside the iPhone for years, according to the report.

The 7360 chip is capable of theoretical peak downlink speeds of 450 Mbps, supports Category 9/10 LTE and 3x carrier aggregation. The chip is likely a more powerful and efficient version of Intel's 7160 and 7260 LTE modems.

The report added that Apple engineers have been traveling to Munich, Germany, for months to work with Intel engineers get the Intel LTE chip ready for the next iPhone. Infineon used to make chips at the facility and had produced 3G modem chips there for the iPhone, but Apple stopped using chips from Infineon after Intel bought the company's wireless business in 2010.

A deal with Intel could give Apple more leverage in negotiations with Qualcomm over pricing. At the same time, Intel is likely going to great lengths to ensure that its baseband chips integrate well with the iPhone's Apple-designed application processor.

Meanwhile, Intel said its first-quarter revenue is expected to be below the company's previous estimate. The company now expects first-quarter revenue to be $12.8 billion, plus or minus $300 million, compared to its previous estimate of $13.7 billion, plus or minus $500 million.

Intel said that the change is a result of weaker than expected demand for business desktop PCs and lower than expected inventory levels across its PC supply chain. The chipset giant said it thinks fewer than expected small and medium businesses are upgrading from old Windows XP machines. Intel also pointed to "increasingly challenging macroeconomic and currency conditions, particularly in Europe" as another factor in its changed outlook. However, Intel said its data center business is meeting expectations.

Intel announced late last year it would merge its chipset unit targeting smartphones and tablets with it PC chip unit, arguing that the distinction is blurring between different computing models. The two units were in very different states of financial health. Indeed, Intel's mobile unit posted $4.2 billion in losses in 2014, but the company expects the mobile business to improve this year. 

Last week at the Mobile World Congress conference, Intel unveiled three new Atom-based mobile processors called the x3, x5, and x7, in addition to a new 7360 LTE modem. The x3, which had been named "SoFIA," is designed for low-cost smartphones, phablets and tablets. Intel said it has 20 customers committed to deliver designs based on the x3, and that chip is expected to boost Intel's market share in the entry-level smartphone market this year.

For more:
- see this VentureBeat article
- see this Intel release

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