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Good News for Apple Inc.'s Upcoming iPhones

Beginning with the iPhone 7 generation, Apple (NASDAQ: AAPL) has decided to dual-source cellular modems from two vendors, rather than rely on a single vendor for the supply of this crucial component.

Those two vendors are Qualcomm (NASDAQ: QCOM), which is generally regarded as the market leader in wireless chips, and Intel (NASDAQ: INTC), which infamously failed to become a major player in the broader mobile processor market.

Image source: Intel.

It's well known that Qualcomm builds superior modem technology to Intel with both superior feature sets and better real-world performance.

Nevertheless, and probably for good supply-chain reasons, Apple wants to dual-source the modem, even if it means holding back the cellular capabilities of the Qualcomm-based iPhone models to closely match those of the Intel-based models.

According to a report from Bloomberg, Apple's upcoming iPhones won't support gigabit LTE (that's 1,000 megabits per second) because Intel's gigabit LTE chip, known as the XMM 7560, won't be out in time for the coming product cycle. That means if Apple aims to continue to dual-source modems, it will have to calibrate the cellular capabilities of the new iPhone models to what Intel's XMM 7480 modem can deliver.

Fortunately for Apple and its customers, Intel appears to have quietly "upgraded" the capabilities of its XMM 7480, which should mean better wireless capabilities for this year's iPhone models.

A 33% improvement in download speed

When Intel announced the XMM 7480, the specs of the chip were, to say the least, underwhelming, leading me to prematurely call Intel's cellular modem efforts "done." The problem with the XMM 7480, at least when it was first announced, was that Intel quoted the upload and download speeds of the device at 150 and 450 megabits per second, respectively. The former was a nice bump up from the prior-generation XMM 7360 used in some of the iPhone 7-series devices, but the latter was the same.

It would seem, though, that Intel has quietly updated the specifications of the XMM 7480 found on its website. The XMM 7480, the current specifications sheet says, supports 600 megabit-per-second download speeds and 150 megabit-per-second upload speeds.

This improvement doesn't get Intel's current best modem to the levels of what Qualcomm is shipping today, but it should allow Intel to catch up with the Qualcomm modem that powers some versions of today's iPhone 7-series devices.

What to expect, then

I suspect that the Qualcomm-based iPhone models this year will use the same modems that are in the current Qualcomm-based iPhone 7-series devices, but with their feature sets fully enabled. In addition, I expect the Intel-based models to use the XMM 7480.

What this means is that Apple should be able to advertise improved cellular capabilities in its next-generation iPhone models, which can be a selling point to some. However, even with the improvements Intel has made with the XMM 7480, Apple still won't be able to offer that "gigabit LTE" marketing point until the 2018 iPhone models arrive -- though I doubt the average consumer will care.  

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Ashraf Eassa owns shares of Intel and Qualcomm. The Motley Fool owns shares of and recommends Apple. The Motley Fool owns shares of Qualcomm. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.