If the rumors are true that the next-generation iPhone will support 4G long-term evolution (LTE), the new Apple smartphone likely will be significantly more expensive to make than the current iPhone 4 model, according to the IHS iSuppli Teardown Analysis Service.
The use of the 4G LTE wireless standard in the HTC ThunderBolt added $39.75 to the cost of the smartphone, representing a major contribution to the cellphone?s sizable bill of materials (BOM) IHS iSuppli's analysis found. In fact, at $262, the ThunderBolt carries the highest BOM cost of any smartphone IHS has ever torn down, rivaling the expense of media tablets.
"It remains to be seen whether the next Apple iPhone set for introduction in September will support 4G LTE," said Wayne Lam, senior analyst for IHS. "However, if it does, two things are clear. First, the iPhone?s minuscule printed circuit board (PCB) will have to grow in size in order to support the first-generation LTE baseband processor as well as all the supporting chipset. Second, the next iPhone?s BOM value certainly will increase substantially compared to the iPhone 4 if LTE is implemented in the same manner as in the HTC Thunderbolt."
The code division multiple access (CDMA) version of the iPhone 4, currently offered by Verizon, carried a BOM of $171.35, based on the IHS teardown from February. If Apple used the same first-generation LTE chips and baseband design as HTC did in the ThunderBolt, BOM of the CDMA iPhone 4 will rise to $211.10, a 23.2 percent increase?not including any other changes to the design that could further raise the materials cost.
If Apple chooses to add LTE to its next-generation iPhone in 2011, it could use a Qualcomm chipset, and might also include separate baseband solutions to provide support for the CDMA2000-1x-EVDO and 3G high-speed downlink packet access (HSDPA) air standards, a similar design approach as the ThunderBolt, according to Dr. Jagdish Rebello, senior director and principal analyst, communications and consumer electronics, for IHS. While expensive and complex, this approach would allow the next iPhone to run on Verizon?s LTE network as well as AT&T?s LTE network when available, while at the same time maintaining backward compatibility with the existing 3G networks of other operators.
However, recent comments from Apple indicate the company will not take the same design approach as HTC did.
"The first generation of LTE chipsets forced a lot of design compromises with the handset, and some of those we are just not willing to make," said Peter Oppenheimer, Apple chief operating officer, speaking at the company?s April 2011 earnings call.
The remark, in addition to the IHS teardown findings, indicates that Apple may seek a more efficient semiconductor solution for adding LTE to the iPhone.
A more efficient solution for implementing LTE exists now than the approach taken in the ThunderBolt: Qualcomm at present is offering the SnapDragon MSM8960, a successor to the MSM8655 used in the ThunderBolt that combines LTE, EVDO and HSPA into a single chip. This new device not only eliminates the multiple baseband chipset approach employed by theThunderBolt, but also would reduce the size and cost of making an LTE-enabled iPhone 5 compared to the ThunderBolt.
HTC did not use the new MSM8960 as it was not available when the company was planning the ThunderBolt.
However, even the new MSM8960 will require the addition of more components, including power amplifiers, radio frequency components and switches, noted Tina Teng, senior analyst, wireless communications, for IHS. With Apple expected to focus on a thinner form factor for the next iPhone, Apple may not choose to implement LTE in its product rollouts this year because of these additional components.
Qualcomm?s next-generation LTE solution is set to be introduced in 2012, which would allow Apple to produce an LTE-enabled iPhone at even lower costs. Apple is likely to be in a position to release this product in the second quarter of 2012.