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Qualcomm, Intel Setup Unchanged with Apple’s iPhone X, says Raymond James
Qualcomm and Intel's competitive situation for modem chips seems little changed with the latest round of Apple iPhones, says Raymond James chip analyst Chris Caso, though a forthcoming special model for China Mobile could be a swing factor.
ByTiernan Ray Sept. 13, 2017 11:54 a.m. ET

The Street today is assessing the lift to component suppliers of Apple’s (AAPL) new iPhones and Apple Watch and Apple TV, unveiled yesterday during Apple’s media event in California.

Among the notes, Chris Caso of Raymond James, who follows shares of chip makers Qualcomm (QCOM) and Intel (INTC), writes today that there appears to be no change in the relative standing of the two companies in supplying the “baseband” wireless modem chip for the iPhone, compared to last year, when Intel for the first time won some business away from Qualcomm for the parts.

Caso has an Underperform rating on Intel stock and an Outperform rating on Qualcomm shares.

"Last year, Qualcomm supplied the baseband to CDMA versions of iPhone and Intel supplies basebands to GSM versions,” observes Caso, "and based on information available at launch, that doesn’t appear to change this year."

Intel’s baseband does not currently support CDMA – therefore the GSM versions of iPhone still won’t work on CDMA networks such as Verizon, Sprint, at Japanese carriers, or at China Telecom. As was the case last year, at launch there appears to be a single SKU for China (using QCOM’s baseband), which works on all three Chinese carriers […] One difference we did note this year is that Apple is offering a “SIM-free” version of iPhone 8 at launch that will work at all carriers. The SIM free version uses Qualcomm’s baseband (since only Qualcomm can operate on all carriers). Last year, Apple did offer a SIM-free version, but waited several months after launch.

Bear in mind, writes Caso, that Apple may introduce a revised model of the phone for China Mobile (CHL) that uses Intel’s modem, because China Mobile is such a big customer. “We would expect Apple to take a similar approach this year,” and that could be “an important determinant” of the mix between the two vendors.

Caso also notes that Skyworks Solutions (SWKS) and Qorvo (QRVO) are each tied to the fate of the two vendors: "Assuming our assumptions are correct, Skyworks would tend to benefit from a higher mix of Qualcomm/CDMA, and Qorvo would tend to benefit from a higher mix of Intel/GSM."

Intel shares today are up 17 cents, or half a percent, at $36.27; Qualcomm stock is down 9 cents at $50.81; Qorvo shares are off 29 cents, or 0.4%, at $72.66; and Skyworks stock is down $1.02, or 1%, at $105.85.
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