Qualcomm’s Next-Gen Chips May Help Apple Launch LTE Devices Next Year

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Qualcomm (NASDAQ:QCOM) announced yesterday that it will start shipping its 4G LTE Gobi 4000 platform to OEMs, starting rumors that the platform will most likely be used in Apple’s (NASDAQ:AAPL) next generation iPhone and iPad. [1] Before the launch of the iPhone 4S, there were rumors that the 4S might have 4G LTE capabilities, but considering that the first to start deploying LTE, Verizon, has so far been able to cover only a third of its subscribers, it was highly unlikely. And now that the 4S has been released without LTE-capabilities and carriers have been ramping up their LTE deployments, it looks increasingly likely that the next generation Apple devices will support 4G LTE. Apple’s iPhone 4 and iPad 2 use the older Gobi 3G technology, which means it is possible that we’ll see Qualcomm’s Gobi 4000 platform used in a 4G iPhone 5 and iPad 3.

See our complete analysis for Qualcomm stock here

Apple’s shift to Qualcomm

What makes it even more likely is that the company has now standardized its baseband processors on Qualcomm’s chipsets for the iPhone 4S. Just to set some background, the iPhone 4 wasn’t a dual-mode phone unlike the latest 4S, i.e, it could be used only on GSM networks like AT&T’s. Initially, when the iPhone was available only on AT&T, Apple used Infineon baseband chips. However, when Verizon started selling the iPhone 4 on its network that works on CDMA technology, Apple switched to a Qualcomm chipset that was capable of working across both GSM and CDMA mobile standards. With the dual-mode 4S that uses the same hardware for both CDMA and GSM platforms, the design change was finalized and Apple has now completely moved from Infineon to Qualcomm’s chipsets. (see Qualcomm Gets Big Win Over Infineon with iPhone 4S)

In addition to the baseband chipsets, Qualcomm also managed to secure the design wins of its RF transceiver and a power management device.

Why Apple doesn’t like LTE now?

Although we find the strategic move to Qualcomm’s chipsets helpful for Apple in its plans for an LTE-enabled iPhone, what has stopped the company from launching one in the past are certain design issues that have plagued recently launched LTE phones, particularly due to poor battery life. [2] When Tim Cook was asked why the iPhone 4 didn’t make use of Verizon’s LTE, he had cited this very reason, “the first gen LTE chipsets force design changes we wouldn’t make.”

Qualcomm may alleviate this concern with its next generation MDM9x00 chips that will ensure better power-efficiency and smaller sizes, owing to its ongoing efforts to transition them to a 28nm process. Qualcomm’s current roadmaps show the 28nm MDM9615 arriving in Q2 2012. [3] These chips will integrate 4G LTE support with a backward compatibility to 3G networks and provide Apple with the integrated capability it wants. Current Android-based LTE-phones use separate LTE  and 3G baseband chipsets.

We currently have a declining market share forecast for Qualcomm in the mobile chipsets category. However, if Apple continues to use Qualcomm’s chipsets in its next-generation phones and tablets, Qualcomm could very well hitch a ride on growing iPhone sales to increase its market share.

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Notes:
  1. Qualcomm now shipping 4G LTE Gobi 4000 platform, BGR, November 16th, 2011 []
  2. LTE: The Great compromise, TechnoBuffalo, November 15th, 2011 []
  3. Why No LTE iPhone 5 in 2011? Blame 28nm Maturity, Check Back In Q2/Q3 2012, October 4th, 2011 []
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