Intel to become Apple's biggest modem chip supplier for iPhone 7, earn $1.5 billion

According to market research firm Cowen & Co the world's largest chipmaker Intel will be supplying 50% cellular modems to Apple for its upcoming iPhone 7 later this year.

Intel to become Apple

The numero uno chipmaker in the world, Intel is set to eat into the pie of Qualcomm by supplying more than half of the Apple iPhone 7 modems. According to market research firm Cowen & Co, this move signals the beginning of a new partnership between Apple and Intel. It was earlier reported last month by the same research firm that Intel could possibly be supplying Apple with 25% of its cellular modems for the iPhone 7.

It has been estimated that the Intel-Apple deal is set to bring in an additional $1.5 billion in revenue for Intel. Cowen & Co adds that Intel will be pocketing $850 million from the revenue as operating profits. It says that cost is a big factor in Apple opting to go with Intel as its four-chip modem comes cheaper that Qualcomm's.

a note to investors by Cowen & Co analyst Timothy Arcuri said Intel will supply 100 million to 110 million 7360 LTE modems to Apple for the new iPhone 7 smartphones.The analyst believes this move away from Qualcomm is merely a move to further diversify its supply chain, an overarching product manufacturing strategy of Apple. The iPhone deal is a great proposition for Intel given the it never really had any substantial presence in the mobile space.

Apple is widely expected to launch its next-generation iPhone 7 smartphone in September 2016 with some software and hardware updates and minor design changes. A larger rear-facing camera lens and reconfigured antenna lines is expected according to reports on what is thought to be a 4.7-inch model. Intel stock advanced after Cowen & Co reported the new partnership between Apple and Intel.