Apple Inc. iPhone 7 Chip Winners Revealed

By Markets Fool.com

Image source: Apple.

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According to a report from DigiTimes, Apple's chip suppliers are planning to start mass production of chips bound for the next-generation iPhone flagships in June. The report says that these suppliers are "generally less production on their unit production for the devices by the end of the year."

In particular, DigiTimes claims that Apple is planning to build around 75 million of these new iPhone by the end of 2016, a figure that the publication claims is lower than the iPhone 6/6 Plus builds in 2014.

In addition to putting out build estimates, the report seems to have a list of some of the suppliers that will provide chips for the upcoming iPhone, which DigiTimes attributes to "sources from chip makers in the iPhone supply chain." Let's take a closer look.

Modem? Intel and Qualcomm

It has been rumored for quite some time that Apple would split the modem orders for the next-generation iPhone between longtime modem supplier Qualcomm and Intel , which has been working hard to build viable modem solutions for the mobile market.

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According to the DigiTimes report, Intel and Qualcomm will indeed be splitting the modem orders. This is a significant win for Intel, as this would arguably represent the highest volume smartphone win that it has gotten since it acquired the Infineon Wireless assets. This would also be a blow to Qualcomm, which has long counted on having the entirety of the iPhone to itself.

Usual suspects elsewhere

The report claims that Apple will tap Dialog Semiconductor for power management chips, NXP Semiconductors for NFC chips and Broadcom for "wireless solutions" (presumably this is in reference to Wi-Fi and related chips, as well as RF filters).

These chipmakers winning spots inside the latest iPhones shouldn't come as a surprise to investors as they were in prior-generation iPhones.

Tapping Taiwan for A10 production

It has been widely reported for quite some time that Apple would shift away from the dual sourcing strategy that it employed for the A9 applications process to a single source for the A10 --TSMC .

DigiTimes' report serves as yet another confirmation of this, claiming that the A10 would indeed be manufactured solely by TSMC on its 16-nanometer FinFET process (not 10-nanometer as some websites have claimed, despite the fact that TSMC won't even begin mass production on 10-nanometer until sometime in 2017).

Winning 100% share for the iPhone 7, after having around 30%-40% share for the A9 in the last product cycle, should provide a nice boost in Apple-related business year over year for the chipmaker even if iPhone unit sales don't grow much (or even contract a bit).

Other likely winners

In addition to the chipmakers listed here, there are several others that are likely to be in the next iPhone. Struggling motion processor vendor InvenSense has indicated that North America is its largest geography and that it will "likely be a key contributor" in the coming fiscal year. This suggests that Apple will use InvenSense in the upcoming iPhone.

A recent report from Nomura Securities (via Barron's) claimed that Apple's longtime image sensor vendor Sony "may not be able to deliver its full share of dual cameras to Apple" as a result of manufacturing yield challenges as well as the recent damage to its manufacturing plant as a result of an earthquake in Japan.

LG Innotek, then, is expected to pick up the slack and potentially benefit from Sony's struggles.

The article Apple Inc. iPhone 7 Chip Winners Revealed originally appeared on Fool.com.

Ashraf Eassa owns shares of Intel and Qualcomm. The Motley Fool owns shares of and recommends Apple, InvenSense, NXP Semiconductors, and Qualcomm. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool recommends Broadcom and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.