Apple Inc. has decided to use Intel Corp. modem replacing Qualcomm Inc. chips for its iPhone used on AT&T Inc. US network and also few of the other versions of smartphones for overseas markets. However, the deal was not publicized. iPhones sold in China and iPhones on Verizon Communications Inc.’s network will continue to use parts from Qualcomm. At present, Qualcomm is the only supplier of the main communication component for all versions of Apple iPhones.
Intel winning the order from Apple helped its share price rise as much as 0.7 percent to $32.15 and reversed the previous declines that it incurred. Whereas, Qualcomm’s share price fell 2.9 percent to $53.40 after losing some major part of its business with Apple; which was one of its largest customer.
Orders from Apple represent the first major win for an Intel mobile chip program that had struggled for importance and racked up operating losses. This is a big dip to the world’s largest chipmaker Qualcomm which was the leader in baseband processors that connect phones to networks and convert radio signals into voice and data. Though Qualcomm is losing some orders, it still retains a major chunk of Apple’s business. However, concerns are that one of its largest customers would drop it completely.
Choosing Intel’s part for a significant role in the product that generates about two-thirds of Apple’s annual revenue is a strategic decision by the company. Diversifying suppliers is a long-established practice by the device makers to make sure they’re in a better position to negotiate on price. However, an analyst’s review mentions that Qualcomm’s modems remain ahead of Intel’s contribution in performance when measured by how much data they can get from the network into the phone.