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Apple Inc. (AAPL) New iPhone 7 Will Score Massively for Intel

Apple Inc (NSDAQ:AAPL) iPhone SE

Intel is said to have made a deal with Apple Inc. that will have it feature in more than half of the iPhone maker’s devices this year. The world’s largest and formidable chip manufacture will be supplying the LTE modems required by the iPhone 7. This is according to the analysis of Cowen & Company. The research entity believes that Intel could pull in around $1.5 billion in revenue from the agreement.

Intel scores big with Apple Inc.

The news is not new but was certainly underestimated by analysts. Previous projections had pegged Intel’s chip contribution to score around 25 percent. However, Cowen & Co. serves a much more profitable view. A higher return would be scored due to the already integrated development costs as well. It would result in a possible $840 million in operational profit for Intel.

Apple Inc (NSDAQ:AAPL) iPhone SE

Apple was long reported to be adding some new partners to its supply chain though. The move is motivated by a need to diversify its suppliers and thereby gain more evenly spread control of its third-party reliances. Qualcomm is known as Apple’s largest chip provider, but the iPhone maker appears to be seeking more independence from the company. Industry estimates had not guessed the near 110 million Intel 7360 LTE modems that Cowen & Co. reported.

Analyst Timothy Arcuri says this is a powerful contribution. However, the perspective change for Intel “as it opens up an entirely new non-CCG narrative.”

Intel wants more to do with Apple

AppleInsider reports that Qualcomm has been Apple Inc.’s sole modem provider for several for years. Intel’s successful break into supplying the maker of the iPhone was not one of chance either. The company has been trying to take some of Qualcomm’s action away for a very long time. Last year it was reported that Intel dedicated a 1000-man team to get its new LTE modem on this year’s iPhone.

Apple may be taking on more of Intel Corp. over the next few years too. Arcuri says that the processor giant could make a play at Apple’s Inc.’s famed A-series chip. Intel may want to instill its modem tech on the iOS app processor. The conveniences are threefold. It would offer lower production costs, save space for the minimalist company, as well as offer better performance for the iPhone range.

The research conducted by Cowen & Co. is not the first to suggest the more than 50 percent Intel chip contribution. In May, sources close to Apple’s supply chain spoke of much the same thing.

Apple is working towards some revolutionary changes on its iPhone product. It is believed to be striving for more durable much more forward-thinking devices. Getting a processor giant like Intel on its side should go a long way towards making this a reality for its consumers.

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