“It is likely that the work with QCOM is being driven by AAPL’s concern regarding maintaining gross margins as well as the need to differentiate the product by performance,” the research firm (which shuns putting the spotlight on particular analysts) said in a research note. “AAPL would not want a value priced iPhone to offer the same kind of graphics and video support, processing power etc. that its premium priced device would, therefore a less powerful lower-end Snapdragon integrated solution would help segment the product.”Detwiler adds that using a Snapdragon processor would allow Apple to integrate Bluetooth and Wi-Fi into the processor, which would allow for a lower-cost single chip rather than three separate chips. Apple has been rumored for years to be looking at creating a low-cost iPhone for emerging markets, but the rumors have accelerated in recent weeks amid suggestions that such a device could launch later this year.
Apple has invested significant amounts of money and people into its own chip design efforts, and the company has typically been willing to user older-generation chips in its lower-priced products as a way to cut costs. Consequently, Apple would seem to be more likely to pursue that route for a low-cost device rather than tapping an all-new partnership for the main chip with Qualcomm.