Intel grabs major mobile chip order from Apple

Intel has beaten rival Qualcomm to supply mobile chip to Apple Inc’s next iPhone in some versions of the new smartphone, Bloomberg reported.

The US-based Qualcomm will retain some of its existing contract with Apple. Stacy Rasgon at Sanford C estimates that Qualcomm gets about $15 per phone from Apple, or about $3.47 billion in Apple’s fiscal 2015.

Intel will supply its modem chips to Apple iPhones used on AT&T Inc’s U.S. network and some other versions of the smartphone for overseas markets.

Qualcomm will be supplying chips to Apple iPhones sold in China, and iPhones on Verizon Communications Inc’s network.

Qualcomm chief executive officer Steve Mollenkopf, on an earnings call in April, said he was assuming that a major customer would switch to multiple suppliers. The good news is that Qualcomm has retained China region, a major focus area for the US technology company.

The mobile chip deal with Apple represents the first major win for an Intel mobile chip program that had struggled for relevance and racked up operating losses.

While Qualcomm is losing some orders, it’s retaining a major chunk of Apple’s business, offsetting concern that one of its largest customers would drop it completely.

AT&T will sell an estimated 22 million iPhones this year and 23 million in 2017, according to Walt Piecyk, an analyst at BTIG. Verizon, which has a slightly smaller iPhone user base, will sell an estimated 21 million iPhones in 2016 and 22 million next year. Apple sold more than 231 million units globally in fiscal 2015. The next version, due for release this fall, is expected to be called iPhone 7.

Intel acquired Infineon’s wireless division, which provided the modem in the original iPhone in 2007. Intel lost the chip contract when Apple chose Qualcomm for subsequent versions of the phone that offered high data rates. Intel’s chip has failed to show up in any smartphone that has sold in significant numbers and the company has gained less than 1 percent market share.

Qualcomm’s other major customer is Samsung Electronics which already uses multiple component providers for its phones. Mollenkopf said his company’s chip business performance will continue to improve in the second half of 2016.