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NEW YORK ( Trefis) -- The Web is abuzz about the possible launch of
Apple's(AAPL) iPhone 5 in October this year and, if rumors are to be believed, the new phone will feature an improved version of
(BRCM) dual-band Wi-Fi chips. Accounting for almost half the company's value, the mobile and wireless business is the most valuable segment for Broadcom.
Broadcom is the leader in wireless connectivity solutions, such as Wi-Fi, Bluetooth, GPS and NFC. Its chips once again being featured in the latest version of the iPhone supports our belief that the company will retain its leadership through our forecast period.
See our complete
analysis for Broadcom
The iPhone 5 will feature Broadcom's BCM4334 dual-band Wi-Fi chips, which is a follow-up component to the BCM4330 chips that are featured in other Apple devices -- iPad and iPhone 4S. Broadcom claims to have redefined the existing chip design to reduce power consumption by almost 40%-50%. The added power saving is expected to compensate for higher energy use of a larger display and use of 4G/LTE. Additionally, the energy efficient chips can help Apple make a slimmer battery, thereby supporting a thinner iPhone.
The new chip supports dual-band Wi-Fi and is capable of handling Wi-Fi Display and Wi-Fi Direct. It also has multiple purposes as it handles other wireless technologies such as Bluetooth 4.0 and FM radio, though the latter has never been actively used in previous iPhone models. Hence, the enhanced Wi-Fi capabilities in the new system-on-chip (SoC) could help bring a number of new applications to the iPhone.
Growing Competition From Qualcomm
Qualcomm(QCOM) has dominated the mobile baseband and application processor market while Broadcom has had an upper hand in wireless connectivity solutions. However, the acquisition of Atheros by Qualcomm puts the company in a better position to offer SoCs that can compete with Broadcom's offerings.
While only a few tablets have 3G or 4G connectivity that require Qualcomm's products, most tablets have Wi-Fi capabilities that can be supported by Atheros. Hence, we think Broadcom should be wary of Qualcomm's growing portfolio in the wireless mobile segment to ensure that it maintains its foothold in the market.