Intel reportedly may find itself in Apple's upcoming iPhone, which would be a significant win for a company that has found itself mostly on the outside looking in on the mobile device market.
Reports have been circulating for a couple of years that Apple was looking at Intel as a second modem supplier to Qualcomm, and officials with the company seem prepared to now make the move. Citing unnamed sources, Bloomberg reported late last week that some versions of Apple's upcoming iPhone 7 will use Intel's modem chips.
The Intel chips will be used in iPhones that will run on AT&T's U.S. network and other devices for the overseas market, the sources said. However, other iPhones on Verizon's network will continue to use modems from Qualcomm, as will iPhones sold in the lucrative China market.
Until now, Qualcomm has been the sole provider of modem chips for the iPhone. Apple officials reportedly have been considering broadening the supplier base for its devices as a way of providing bargaining power around component pricing and to protect itself against supply-chain issues. Other device makers have similar arrangements. Samsung uses Qualcomm's Snapdragon 802 system-on-a-chip (SoC) in some of its Galaxy 7 smartphones, while other versions of the device run Samsung's own Exynos processors.
For Intel, getting its modems into the iPhone would help give it the foothold in the mobile device market that has long eluded the chip maker. Intel was famously late in reacting to the rise of smartphones and tablets, which is dominated by SoCs designed by ARM and manufactured by Samsung, Qualcomm and other chip manufacturers.
Intel scrambled to catch up, putting a lot of effort and resources into developing its low-power Atom processors and using deep discounts and other methods to try to persuade device makers to use its technology in their products. However, Intel found it difficult to catch up with Qualcomm's technological lead, and the company's mobile business steadily lost millions of dollars every quarter.
In April, Intel officials said they were restructuring the company and refocusing its efforts around such emerging markets as the Internet of things (IoT) and cloud computing, as well as putting more emphasis on its data center business. Part of the restructuring included ending development of some chips aimed at smartphones and tablets, including its SoFIA and Broxton Atom chips.
Part of the reasoning behind the decision was to free up more resources for its work on modems and 5G, according to Patrick Moorhead, principal analyst with Moor Insights and Strategy, who was the first to report about Intel ending the work on the Atom SoCs.
"Intel has been showing some serious commitments to 5G deployment and penetration in the future, and they clearly believe that 5G is their opportunity to carve out a competitive advantage for themselves end-to-end in the future of mobility and in connecting the growing number of smart and connected 'things' to the cloud," Moorhead wrote at the time. "From my vantage point, Intel has a better chance in 5G than they do in low-end 4G mobile devices."
Apple's adoption of Intel's modem will mean a significant boost to the chip maker. Even though worldwide shipments of smartphones have been slowing in recent quarters as the market becomes more saturated and people hold on to their devices longer, Apple is still expected to sell tens of millions of iPhones this year. According to analysts at Gartner, Apple in the first quarter shipped more than 51.6 million iPhones, giving it 14.8 percent of the global market and placing it second behind Samsung.
However, Apple iPhone sales fell 14 percent over the same period in 2015, representing the company's first double-digit year-over-year decline, the analysts said.