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Apple works with small vendors in 3G iPhone

Posted: 17 Jul 2008     Print Version  Bookmark and Share

Keywords:iPhone  chip makers  3G  baseband 

Following the trend it set with its original iPhone, Apple Inc. has shunned top-tier chip makers for many of the major sockets its latest model released recently.

Infineon, Samsung and TriQuint were among the top design wins in the iPhone 3G. None of the companies are leaders in the areas for which Apple picked them, according to Will Strauss, principal of market watcher Forward Concepts.

"Apple apparently wants to stay away from the traditional suppliers such as Texas Instruments and Qualcomm and work with smaller vendors they can control," said Strauss.

Infineon supplies the UMTS base band and transceiver in the iPhone 3G. In the Rs.40,021.07 crore ($10 billion) base band market, Infineon ranks fourth with seven per cent of the market, tied with Freescale. Qualcomm and TI lead that market with 37 per cent and 33 per cent market shares respectively, according to Strauss.

In UMTS transceivers, Infineon ranks third with a 16 per cent market share—tied with NXP—behind Qualcomm and STMicroelectronics with 28 and 23 per cent respectively. "Infineon is no slouch, they just haven't been well known," said Strauss.

In power amplifiers, RF Micro Devices is the leader with TriQuint—Apple's pick for three chips—a more distant follower. In application processors, Apple's partner Samsung ranks below TI, Marvell and Renesas, Strauss said.

"Samsung was pretty new to that market when they got the original iPhone deal," Strauss said.

Cost is one of the issues likely driving Apple's choices. Strauss said Samsung's own handset that uses the Infineon chip set has a total bill of materials 20 per cent lower than a similar design using Qualcomm chips, largely because of lower chip and royalty costs associated with the Infineon parts.

Qualcomm has a strong patent portfolio in wideband CDMA and charges handset makers royalties as high as five per cent of the unit's cost. But Infineon reportedly has a patent licence with InterDigital Inc. that has a similar patent portfolio and lower royalties.

Apple itself falls towards the bottom of the pack as a handset maker. In 2007, Forward Concepts listed Apple as 29 out of 37 handset makers it tracked based on shipments of about 50 lakh (5 million) phones.

"Apple could easily move into the top 10 this year," said Strauss as long as it can double shipments to about 1 crore (10 million) units. Nokia currently leads the list, shipping an estimated 43.7 crore (437 million) phones last year, but volumes drop off rapidly beyond the 8 crore (80 million) units LG Electronics shipped that got them to number five on the list last year, Strauss said.

- Rick Merritt
EE Times

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