How China Mobile Could Get the iPhone (Update 1)

Updated from 9:17 a.m. EST to provide analyst comments in the fifth paragraph.

NEW YORK ( TheStreet) -- China Mobile ( CHL) is the one major carrier in the world without Apple's ( AAPL) iPhone. Qualcomm ( QCOM) may be about to change that.

Qualcomm announced a new Long Term Evolution (LTE) chipset on Thursday, the RF360 Front End Solution, which for the first time ever offers a truly global 4G LTE design for mobile devices. It can run on all seven modes, including LTE-FDD, LTE-TDD, WCDMA, EV-DO, CDMA 1x, TD-SCDMA and GSM/EDGE.

That's important, because China Mobile's 3G network is TD-SCDMA based, though it is working on a 4G network with its own homegrown technology. Part of the reason why Apple has not brought the iPhone to the world's largest carrier is that the technologies did not match up, but the new Qualcomm chip may change that.

Alex Katouzian, Qualcomm's senior vice president of product management, hinted at this in the press release. "Our new RF devices are tightly integrated and will allow us the flexibility and scalability to supply OEMs of all types, from those requiring only a region-specific LTE solution, to those needing LTE global roaming support," Katouzian was quoted as saying.

Deutsche Bank analyst Brian Modoff called this chipset a big deal in a research note, saying it will be beneficial to Qualcomm to have a complete front-end solution. He noted that he was "admittedly surprised that their first generation will include LTE." Modoff rated Qualcomm "buy" with a $78 price target.

Apple currently uses Qualcomm as part of the components for the iPhone 5. It uses Qualcomm's MDM9615M LTE modem and RTR8600 Multi-band/mode RF transceiver, according to ifixit's teardown of the device.

Despite not officially having a contract with Apple, China Mobile is thought to have as many as 15 million iPhones on its network. An official deal could mean a significantly higher number of iPhones on the telecom giant's network.

China Mobile is currently the only major provider in China that does not have access to the iPhone 5. Both China Telecom ( CHA) and China Unicom ( CHU) signed deals with Apple to bring the iPhone 5 to their networks last year.

A deal with China Mobile would be welcome news for Apple shareholders, who have had a tough go of it in recent months. Over the past three months, Apple shares have fallen 20.6%, compared to a 7% gain in the Nasdaq.

In an analyst note last month Evercore Partners analyst Rob Cihra said he believes China Mobile will eventually need to come to the table with Apple, as it's losing market share for the most important clients, ones who use data plans, or 3G customers. "We think China Mobile could be starting to 'need' the iPhone more, since it has seen its 3G market share erode by -7 percent to 37 percent since 2011 vs. China Telecom+Unicom having gained +7 percent to 63 percent," Cihra wrote in his note.

Last month, Apple CEO Tim Cook and China Mobile's Chairman Xi Guohua met to discuss "matters of cooperation." This was taken as big news, given that China Mobile has more than 700 million users, and more than 10% of those users have 3G access, or data plans.

Apple has long said that China is incredibly important to its future, and brought the iPhone 5 to the country in mid-December. The latest iPhone was very well received, with Apple announcing it sold 2 million iPhone 5s in its first weekend in the country.

AAPL Chart AAPL data by YCharts

In its most recent quarter, Apple noted that revenue from Greater China (which includes China, Hong Kong and Taiwan) was $6.83 billion. That equalled 67% year-over-year growth, despite only having the iPhone and the new iPad in the country for the last two weeks of the quarter.

Qualcomm's new global LTE chipset only adds further credence to the story that the iPhone may in fact be closer to its China Mobile arrival than many think. By bringing the iPhone 5 to China Mobile, it would be a huge coup for Apple - one that will help turn the tide against Samsung, ZTE and other handset makers firmly entrenched in China.

Apple could not be immediately reached for comment for this story.

--Written by Chris Ciaccia in New York

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