Analyst: No Apple Custom Baseband Chips Before 2015
Apple’s (NASDAQ:AAPL) rumored custom iPhone baseband chip probably won’t be ready until 2015 or later, according to a recent research note from J.P. Morgan analyst Rod Hall. Earlier this week, DigiTimes cited unnamed industry sources that indicated Apple had plans to begin manufacturing its own baseband processors for use in the iPhone. Baseband processors handle the radio functions found in smartphones, such as the connection to a wireless mobile network.
Apple currently buys its baseband chips from Qualcomm (NASDAQ:QCOM), which produces the chips at Taiwan Semiconductor Manufacturing Company’s (NYSE:TSM) foundries. Both companies could be seriously impacted by Apple’s rumored move to in-house baseband chips. According to the Taipei-based media outlet, Apple will place its custom baseband orders with Samsung (SSNLF.PK) and Globalfoundries.
However, according to Hall’s note to investors obtained by Apple Insider, the switch is unlikely to happen before 2015 due to the “notoriously difficult” development process associated with baseband chips. Hall noted that Apple’s move to in-house baseband chip design and production is likely driven by the company’s desire to improve the power efficiency of its devices. As noted by the analyst, Apple has already demonstrated its ability to design its own chips with its A-series application processors. Presumably Apple’s custom baseband chip would be integrated with the A-series processor into a single chipset.
As noted by Apple Insider, Qualcomm currently supplies Apple’s iPhone baseband chips, and it is estimated that the chipmaker derived approximately one quarter of its revenues from Apple in 2012. For this reason, Hall believes that Qualcomm would be amenable to allowing Apple to integrate its baseband IP on Apple’s A-series processors via a licensing agreement.
Qualcomm is not the only chipmaker that J.P. Morgan’s Hall believes could be negatively impacted by Apple’s increasingly powerful custom chips. In a research note released earlier this week, Hall predicted that Apple could dominate the cheaper laptop market and put Intel (NASDAQ:INTC) in jeopardy if it introduced a keyboard and mouse user interface to its iOS mobile operating system, a feature Hall called “iAnywhere.”
“If iAnywhere allowed these users to flexibly use an iPad as both a PC and a Tablet we believe that many would elect to simply own one device,” wrote Hall in a note seen by Nasdaq.com. “We also believe that many users currently purchasing lower priced laptops from vendors like Dell would choose to switch to Apple.”
Apple stunned many industry watchers when it introduced the powerful A7 processor with 64-bit architecture in the iPhone 5S. A similarly large increase in computing power for the next-generation A-series processor could easily make an iOS-powered desktop or laptop computer a reality.
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