Apple hoarding CDMA chips for Verizon iPhone

Apple is rumored to have placed a large order of CDMA chips as the company tools up for a large production run of iPhones to launch on Verizon in January 2011.

TechCrunch reports (via a source familiar with supply chain logistics) that Apple has placed a large order for CDMA chips from Qualcomm for an iPhone that will run on the vaunted Verizon Wireless network. The devices will be manufactured in December and arriving as a finished product around January 2011 according to the report.

Sources with knowledge of this entire situation have assured me that Apple has submitted orders for millions of units of Qualcomm CDMA chipsets for a Verizon iPhone run due in December. This production run would likely be for a January launch, and I’d bet the phone is nearly 100% consistent with the current iPhone 4 (with a fixed internal insulator on the antenna).

The most interesting aspect of the ongoing Verizon/iPhone melodrama is that it's so played out that almost no one believes it anymore.

Verizon was Apple's first choice to carry the iPhone in 2007, but it rebuffed Apple's offer which required a cut of every customer's monthly bill. Apple looked into developing a CDMA iPhone as early as 2007 and rumors have been circling about it ever since.

I agree with John Siracusa's analysis that the best way for the iPhone to remain competitive with Android in market share is to offer it on every carrier.

The only way for Apple to eliminate the distribution and marketing advantage currently enjoyed by Android is to make sure that everywhere an Android phone is for sale, there’s an iPhone sitting right next to it that will work on the same network.

U.S. iPhone sales will eventually plateau as AT&T gets saturated with iPhone users that are willing to tolerate its network. A customer already in a contract with one of the other three major U.S. carriers -- Verizon, T-Mobile and Sprint -- is more likely to go with a less expensive Android or Blackberry phone-du-jour rather than pay the exorbitant early termination fee (ETF) for breaking their contract. (Most smartphones now carry a $350 ETF, minus $10 for each month of contract fulfilled.)

Apple needs to offer the iPhone on every U.S. carrier and not fleece its loyal customers by giving the exclusive contract to the highest bidder. Exclusive carrier deals are bad for consumers and ultimately bad for shareholders too.

Photo: 9-to-5Mac